THE NAGA GROUP AG Just when there was a glimpse of hope for 2022, and nearly every sector was bouncing back, the Omicron variant was detected. This new variant was first detected in Botswana on November 11th 2021, and on December 1st, the first U.S case was identified. WHO classified it as a variant of concern (VOC), causing lockdowns in airports almost immediately. Omicron now gives investors flashbacks to early 2020, when the pandemic first hit.
Some sectors like the Commodity market have been greatly affected by recording losses and a fall in demand. However, the commodity market is already rallying and both energy and non-energy commodities soared, rising 8% and 4.7% respectively in January 2022.
Therefore we are likely to witness a lot of activity in the Commodity market as it tries to bounce back. Moreover, with this new variant, it is now again up to the Pharmaceutical industry to get back to work and tackle it.
Commodity Industry
You and I cannot deny the effect that the Covid-19 pandemic had on our lives. Two years on, the commodity market has not recovered. In Peru and South Africa, companies had to shut down or reduce operations due to government-imposed restrictions. It will interest you to know that ever since, the demand for commodities such as copper, iron, and zinc has been low as the market anticipated lower demand for these products and reduced production operations.
Gold, however, witnessed an advantageous exception. Due to the fear of uncertainty surrounding it, it experienced high demand. As for how it will perform in 2022, we have to observe how the new Omicron variant affects the global economy and international trade.
What are analysts saying concerning the commodity industry in 2022? Many believe it might be a difficult year for commodities as banks worldwide are likely to set stricter policies and alter interest rates. This is believed to respond to the supply-driven inflation currently at 7% in the U.S., following a volatile year marked by a rally in energy.
Other key factors you'd want to consider in the commodities market include demand shocks which may happen if consumers or business restrictions are imposed due to the Omicron variant. Another is if China's economic growth will slow down further. In this case, Neuberger Berman's Kaya states, demand will be the real factor in this space.
On the other hand, Oil has been on a roller coaster ride for two years. Experts and analysts believe that the world will likely experience oil deficits in 2022 and 2023.
Although Western corporations no longer want to explore new oil fields due to global warming concerns, the demands for raw materials linger. This resulted in a constraint that saw OIL prices skyrocket in 2021. However, there may be a glimmer of hope on the horizon following the OPEC+ meeting held on January 4, 2022. OPEC+ reconfirmed their production adjustment plan to produce an additional 400,000 barrels per day for the month of February 2022 as per their previously decided schedule.
Oil prices surged to enter February with their highest monthly gain in a year. This was due to the rise in supply shortage and the political tensions in Eastern Europe and the Middle East. If these factors persist, OIL prices might continue the uptrend in the following months. Therefore, as the world tries to balance out the Covid-19 pandemic and global markets try to adjust, the commodities market is undoubtedly one of the key sectors to keep your eyes on.
Pharmaceutical Industry
Last but certainly not least, the pharmaceutical industry. The pandemic ensured that the world paid more attention to the pharmaceutical industry. Be it the big shots like Pfizer, Moderna, Johnson, or biotech companies like BioNTech or CureVac. We all paid attention and expected the miracle of vaccines in the heat of the pandemic.
The pharmaceutical sector is one sector that has been slow in adopting technology. However, the advent of Covid-19 changed the status quo, forcing pharma companies to change how they operate, become more agile and open-minded when discovering new drugs, developments and manage new clinical traits. This made the pharmaceutical market a key player when the pandemic was intense.
We expect to see more activities from this sector since we have not totally contained the Covid-19 pandemic or largely maintained its trailing effects. Moreover, chronic diseases like Cancer and AIDs still exist aside from Covid. With evolving approach from pharma companies, we will likely see more developments in some of these companies.
The list of these companies is long. AbbVie, for instance, developed and commercialized Marinol's first cannabis-based drug. The drug helps to stimulate appetite in patients who have AIDs and cancer. Danish company, Novo Nordisk, developed an oral insulin variant called Rybelsius, which has been worth billions in potential. BMS is not excluded from the scene as they produced a wonder medical innovation called Optivo. It can fight 11 different types of cancer.
In 2022, the Health sector might be a key player in the global economy, and understandably so. As long as the Coronavirus persists, we only expect more action from this sector. The operating systems of pharmaceutical companies are filled with drugs and vaccines, but that does not reduce their prospects of experiencing more developments. So in 2022, you cannot avoid keeping an eye on the pharmaceutical company.
Conclusion
Although we are hopeful that 2022 doesn't look anything like the rough patches of 2021, likely, we may relive our fears. With the uncertainties surrounding the pandemic and inflation rates across the globe, we can only keep our fingers crossed at best. However, there is a lot of optimism about the developments in the Pharmaceutical sector. Experts believe that this sector might see a positive change in trends in 2022.
Therefore, as we start the second month of the year, investors might want to be observant about developments in asset classes and activities in these sectors.
Risk Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade, and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not consider your investment objectives, financial circumstances, or needs.
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NAGA Group AG published this content on 03 February 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 February 2022 11:49:01 UTC.
