I shared some of my thoughts on what a post-COVID world would look like here. However, what are some experts in the financial markets talking about this? This is a summary of a report released by Bank of America Global Research on Covid-19 Investment Implications: The World After Covid Primer.
Interesting Facts
- All G20 countries have implemented some sort of lockdown, equivalent to 80% of global GDP under lockdown
- It took airlines 64 years to reach 50 million users, Netflix 7 years, but Disney+ achieved this in just 5 months with kids under lockdown (Gen Z bonus stat: it took the HouseParty app just 1 month!)
- Zoom daily active users jumped 30x in just 4 months from 10 million in December 2019 to 300 million in April 2020
- Fortnite is now more popular than football by Google Searches
Every crisis teaches us something new, forcing us to innovate and make the world a better place. The Black Death, which killed as much as a third of Europe’s population during the 14th Century, led to severe labour scarcity. Such higher wages resulted in the decline of feudalism, encouraging innovation in agriculture technology and the accumulation of capital, which eventually led to the Industrial Revolution. The Great Depression created a ‘waste not, want not’ attitude that defined consumer patterns for decades. The 1970s oil supply shock led to the first efforts on energy conservation, efficiency and independence. While the 2003 SARS epidemic helped jumpstart China’s nascent eCommerce sector and brought in the era of mobile payments in the country. What are some trends that would be long lasting after this COVID-19 crisis?
5 Key Trends by Bank of America Global Research
There were some similar thoughts of what we viewed the post-covid world would look like as mentioned in the article above. However, Bank of America Global Research went deeper exploring 5 key trends that would extend beyond the current lockdown period. These 5 key trends has an investment universe of approximately US$20 trillion, which is bigger than the GDP of the US, Europe or even China & India.
- Geopolitics & Globalisations. The rise of China as a manufacturing hub and the decline of US/European manufacturing started since 1990. The US China Trade War or even anti-China sentiments were something was brewing even before the COVID-19 Crisis.
- Tech Wars. The COVID-19 will be leading the combination of new communication infrastructure, data generation, cloud computing power and bandwidth. In the shorter term, trends like working from home, eCommerce, and stay-at-home activities (such as streaming and eSports) could see increasing long-term adoption. Some interesting facts are how in terms of R&D spending, China has already surpassed the US today where China has spent US$501 billion, while US has spent US$493 billion. Additionally, in terms of quantum computing patent filings by country, China has 2x that of US and 13x that of Europe.
- Big Governments. This crisis has made the technology industry useful if not vital for implementing government power. The US Government has been pressuring Big Tech to share location data with them to help fight the spread of COVID-19. While in China, Tencent and Alibaba has helped spearhead the QR Code System, assigning a colour code to each citizens depending on their health status.
- Health. While we all know that societal wealth and economic is built on individuals having a healthy lifestyle and thus a productive economy, health will be the new focus for ESG. There will be an amplified importance of healthcare and its social role and accelerate other pressing global public health issues such as drug pricing, future pandemic prevention, universal healthcare coverage etc.
- The New Consumer. Generation Z have been better prepared for this new era of interactions (or lack of) since the COVID-19 crisis. The other generations have been playing a game of catch up to learn from this new generation and change their consumer habits. Such addressable markets are such as streaming, social media, eCommerce etc.
Conclusion
As John F Kennedy puts it best, ‘When written in Chinese the word crisis is composed of two characters – one represents danger, the other represents opportunity’.
Readers interested in getting their hands on this full report, I will be sending it out to my subscribers this Wednesday (13 May 2020). For those interested, just leave your email contact in the link below. While those who are already an InvestingNook Subscriber you would automatically be on the list already!
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