The stocks to avoid in case of a coronavirus second spike

Investors could be putting their savings at risk by snapping up severely discounted stocks as a second spike in coronavirus cases and another lockdown look increasingly likely.

Airlines, oil majors and high-street banks have been some of the most-bought companies since the stock market sell-off in March, of which they were some of the biggest casualties. Players in The Telegraph Fantasy Fund Manager competition have also be adding them to their portfolios expecting share prices to recover as life returns to normal.

But those expecting a quick bounce back could be disappointed if the public health situation takes a sudden downturn, according to David Coombs, of fund manager Rathbones.

Chinese and German stocks took a hit in June after a surge in new coronavirus cases caused governments to reimpose some lockdown restrictions.

“We fully expect there to be regional spikes in Britain too,” Mr Coombs said. “It is likely to suffer more than other countries if this happens, as we have very densely populated cities and don’t yet have a well-developed ‘track and trace’ system.”

Leicester may prove indicative of what is to come if Britain reenters lockdown. A number of businesses in the city, particularly pubs and restaurants, have raised concerns about whether they will be able to survive the second round of restrictions imposed after local coronavirus cases spiked. 

Pubs and restaurants 

The most obvious victim of a second coronavirus spike in Britain would be the fragile hospitality industry. Pubs, restaurants and bars spent thousands of pounds on stock in the lead up to reopening on July 4, which would go to waste if they had to shut their doors once again. 

“In a second wave, we’d likely see a repeat of the sell-off that happened in March, only exacerbated,” Mr Coombs said. “The sectors that suffered last time may do even worse.”

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