Investors around the globe are now decisively and proactively seeking out ‘new world’ sectors and businesses as the investment landscape readjusts due to coronavirus pandemic and looks ahead to an economic recovery.
Every downturn produces a new normal – the one that is likely going to being prompted by Covid-19 can be expected to be no different.
Across the world there’s been immense international disruption for firms with many industries experiencing major issues of supply, demand, or both.
Yet there are still some parts of the economy that are in ‘boom time’ thanks to the situation.
As such, as and should investors are now seriously eyeing these ‘new world’ sectors and companies in order to create, build and safeguard wealth.
This is shown on the tech-heavy Nasdaq Composite index which has rallied, where other global indices have faired not so well.
New industries will come into their own and, as ever, there will be winners and losers. This will mean job losses in some sectors and huge – possibly unprecedented – job and investment opportunities in others.
Indeed, I recently wrote in a media statement that a coronavirus recession is likely “to fundamentally shift how we live, do business and invest.” He added that it could also be expected to “speed up the Fourth Revolution, which is fueled by new technologies, such as Artificial Intelligence and mobile supercomputing.”
Big Pharma and big tech are just two of probable winner. The likes of Pfizer, Johnson & Johnson, Novartis, Apple, Facebook, Amazon, and Google’s parent company Alphabet have immense cash reserves to continue, maybe even bolster, research and development and to sustain their supply and business operations.
These sectors are also likely to face higher demand as the world grapples with the public health emergency and as social distancing, isolation and quarantine affect much of its existing and potential consumer base.
In addition, regulatory restrictions are likely to be lowered and political goodwill towards these sectors and the firms within them is likely to be considerably increased.
In fact both these sectors could be seen as vital national assets by many governments around the world.
Of course, there will be a recovery from the global economic impact of coronavirus and it is can be expected that investors will look towards China.
The epicenter of Coronavirus has shifted from China to Europe. Europe has now registered more Coronavirus cases and fatalities than China.
Almost immediately, the Chinese authorities launched intense lockdown measures to try and halt the outbreak. It appears to have been successful, with cases having fallen considerably.
However, the adverse impact on the world’s second-largest economy – which drives in a large part – the global economy – has been significant.
Therefore international investors will now be looking at how China gets back on its feet economically. Did the extreme lockdown work? Were the public health facilities adequate? Will there be another outbreak as activity resumes? How will the authorities now kickstart the economy? How will these decisions and the success of them impact the rest of the world?
I’m believe that global financial markets will stage a relief rally when there is a definitive signal that the infection rate is dropping and that cases have peaked. Investors will come off the sidelines and prices will jump.”
Therefore, the next stage in China’s public health and economic recovery is critical.
What takes place in the People’s Republic will be used by investors as a sentiment guide and a gauge for the rest of the world, particularly the U.S. and Europe where Covid-19 transmissions are yet to peak.
We can be in no doubt that the world has already changed because of coronavirus – and will do so more and maybe at a faster pace – and sensible investors are increasingly cognizant of this new normal and are appropriately rebalancing their portfolios
Times of immense tumult can be times of great ingenuity, promise and opportunity. I’m confident history will prove this to be true.