Life as (Un)Usual | After the Lockdown, What Next for Investors?
It’s still not clear what the long-term economic and social impact of Coronavrus will be. In the recent short-term, the world has witnessed death, illness, social disruption and economic upheaval on an enormous scale - and which seems set to continue for some time.
Many experts are questioning what kind of world we will find when we are released from lockdown – Which sectors will be able to thrive and which will have been fatally weakened? Will we go back to the old daily routines and commutes? How will weeks and months of enforced social distancing affect our psychology and the way we interact in future? And, most importantly, how can such pandemics be identified, contained and cured more efficiently and how can their economic impact be minimized?
Many of these questions remain unanswered, but some smart executives and investors are already looking towards the future and considering the possibility that many of the changes to the way we live, work and consume may become permanently embedded features of our new world – particularly given the risk of a repeat outbreak as the number of new infectious diseases like SARS, HIV and Covid-19 has increased nearly fourfold over the past century .
Underpinning many of these changes is the technology sector – it would be impossible for many of us to do business, work remotely, shop online, be entertained or communicate during lockdown without Apple, Microsoft, Google, Skype, IBM, Netflix and other major tech providers. Equally, new drugs, medical procedures and treatments are being created thanks to AI-assisted  research and diagnostics, robotic surgeons, genomic editing and health trackers that are providing hope for faster and more effective treatment of any future outbreaks.
Against this backdrop, here are some scenarios that investors can consider as they rethink their portfolio allocations:
The Work from Home Trade
Instead of piling into packed trains to sit at small desks in expensive offices, many professionals have been working from home- as productively, collaboratively and efficiently as ever- if not more so. Many will be dreaming of a future where they can continue in the same vein indefinitely.
Many managers and executives forced to adapt to the changing mode of operations are now wondering if the expensive offices are worth it, if stress in their teams (one of the top causes of lost working days in the western world  can be permanently reduced and if the digital-based communication with their team and clients has previously undiscovered value.
Have we learned that many people don’t need to wake up early to come into London or New York to do their job, or travel to a meeting, but can instead do it as (or more) effectively from home using web-based tools and video conferencing? All this at a lower cost to the company and at a higher quality of life for the individual.
If you believe that remote working will see a long-term increase, then you may also believe that the following sectors supporting remote working may have long-term investment potential:
- Cloud technology - essential for remote access to data, software and communication tools
- Software – web-based software providers like Dropbox or LogMeIn
- Cyber Security – with more connected devices across more networks the strength of a company’s remote cyber security systems will be paramount
- Collaboration tools – tools that support team coordination and collaboration like Microsoft teams and Trello seeing huge upticks in use as people adapt to remote working patterns
- Video & Voice – we still need to chat, but maybe not face-to-face or on the phone – messaging tools like Slack and video conferencing tools like Zoom and HouseParty are seeing large usage growth as people drop the desk phone and meeting rooms for new alternatives . This is also extending to education as Zoom, in response to the widespread recent school closures, is providing free basic accounts for schools in 16 countries . A wide variety of education apps and mobile technology are ensuring millions of pupils are able to remain in direct communication with teachers and access new homework or tasks.
- Social Media: While working from home we still want to stay connected with friends and family. Social networks have an important role to play in maintaining a sense of connection and community in an atomized and contained society
Relevant HANetf Products:
The Ecommerce Trade
The high street is likely to look very different for consumers in the post-Coronavirus world. Those of us in the UK have already seen names like Laura Ashley, Debenhams, Carluccio’s, Oasis and Warehouse go into administration- and others are likely to follow. But the big winners from Coronavirus have been e-commerce providers – with consumers blocked from their favorite shops, many are turning to online stores to buy what they need. Amazon, for example has seen surging share prices as consumers drop a reported $11,000 a second on the site. Companies with strong ecommerce offerings have had an opportunity to reach a new client base – and one that can be retained in future. If you believe that ecommerce will continue to grow, then you may also see long-term potential in the following sectors:
- Cloud technology: Not only does cloud technology underpin the websites, security, payment systems and access devices needed for ecommerce, but the leading cloud provider also happens to be Amazon via its AWS platform.
- Ecommerce providers: Not just Amazon, but all companies with a strong ecommerce footprint. Other major global players in this space include Chinese company Alibaba and Latin American company Mercado Libre.
- Advertising and marketing: With more people shopping online, it will be more important to get traffic to individual retailer’s sites – expect a growth in digital marketing and advertising across platforms.
- Payment Systems: You can’t have an ecommerce site without a way to take payments. Providers of payment systems are well positioned to benefit from increased online spending.
- Fleet automation: Many delivery companies are looking at how autonomous vehicles and even drones can be used to speed up shipping and delivery of goods. Companies that are involved in the development of these technologies may benefit from the long-term trend towards automation and robotics.
Relevant HANetf Products:
The Health and Wellness Trade
A longer-term impact of Coronavirus will be a raised awareness of health and infection and a push to identify, contain and cure similar outbreaks much faster in future. Key to medical advances in treating Coronavirus, as well as other diseases, is the confluence of technology and healthcare. From video-based consultations to health trackers, low-contact (robotic) treatments and AI-powered diagnostics, there are many companies outside of traditional ‘Big Pharma’ that are leading his transformation.
Here are some of the constituents of the HAN-GINS Indxx Healthcare Innovation UCITS ETF (WELL) that are part of the global fight against Coronavirus and other major diseases:
Regeneron Pharmaceuticals, Inc.
Regeneron has identified hundreds of virus-neutralizing antibodies. This biotech leader is at the forefront of the race to find a vaccine for COVID-19. It is one of WELL”s largest 3 holdings (mid-April).
Smith & Nephew plc
Smith+Nephew is contracting with the U.K. government to build a new ventilator specifically designed for the large-scale production needed to combat the spread of COVID-19.
The FDA granted an emergency use authorization to Qiagen (NYSE:QGEN) for a diagnostic test that the company said can differentiate among COVID-19 and 20 other respiratory diseases.
bioMérieux, a world leader in the field of in vitro diagnostics, is announcing the forthcoming launch of 3 different tests to address the COVID-19 epidemic and to meet the different needs of physicians and health authorities in the fight against this emerging infectious disease.
Boston Scientific Corporation
Collaborating with hospitals, universities and industry peers to find new and innovative ways to address the urgent demand for protective personal equipment (PPE) and ventilators.
DiaSorin Molecular LLC, a division of DiaSorin S.p.A., has received the Emergency Use Authorization (EUA) from the FDA for their Simplexa™ COVID-19 Direct kit. The kit provides a sample-to-answer test for the detection of severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2), the virus that causes COVID-19, directly from nasopharyngeal swab specimens.
Alnylam Pharmaceuticals, Inc
Vir Biotechnology, Inc. (Nasdaq: VIR) and Alnylam Pharmaceuticals, Inc. (Nasdaq: ALNY) announced an expansion of their existing collaboration to include the development and commercialization of RNAi therapeutics targeting SARS-CoV-2, the virus that causes the disease COVID-19.
Focused on delivering the ventilation therapy that is essential to treat the respiratory complications of COVID-19.
Medtronic plc (NYSE:MDT), the global leader in medical technology, today announced its Medtronic Care Management Services (MCMS) business is launching two new solutions designed to help assess, monitor, and triage support for patients who may be concerned about COVID-19 and their respiratory symptoms. It has already launched its new Respiratory Infectious Disease Health Check to existing MCMS customers, and it is now launching a new COVID-19 Virtual Care Evaluation and Monitoring solution available to U.S. health systems, health plans and employers. It is also helping with the production and delivery of more ventilators globally.
Adaptive Biotechnologies Corp.
Microsoft MSFT and Adaptive Biotechnologies ADPT recently extended partnership in a bid to aid public health officials and researchers to access and track data pertaining to COVID-19 patient immune responses.
The (Anti) Big Brother Trade
Some cynical commentators have been discussing the different approaches of various governments to the Coronavirus – many have fears of a growing surveillance state or increased ‘nannying’ and a lack of privacy in future -again powered by new technologies. In two examples, Derbyshire Police Force were criticized in the media for using drones to spy and tell off people caught hill walking during the lockdown and China used extensive social media monitoring, facial recognition and other monitoring software to identify, track and punish people who exposed the misinformation of their communist overlords.
If you are a cynic, or more conspiratorially minded, then you may see a future where the following sectors have room for growth:
- Drones: police forces around the world have adopted drones as a means to police potentially infected areas. Drones are also being explored within logistics as a way to deliver food, materials and other goods to consumers while minimizing human-to-human contact
- Gold: Economic stimulus packages are now being implemented by many governments, but some investors will want to mitigate the impact of devaluation by owning more gold – it can’t be devalued, it can be easily bought and sold and has been an investor staple throughout almost every major pandemic and outbreak the world has ever seen
- Bitcoin: For similar reasons, investors may want to own more of a currency that cannot be manipulated, traced or restricted by governments
- Cyber Security: There will always be a cat-and-mouse game between governments trying to gain information on their citizens and privacy advocates wanting to restrict that access. With increased digital tracking of patients, cloud-based medical records and connected health trackers, cyber security firms have an important role to play safeguarding devices and data no matter what side of the debate you are on.
Relevant HANetf Products:
However you see the future, technology is likely to play a massive role in the reshaping and rebuilding of the global economy. At HANetf, we have a range of UCITS ETFs that target long-term, transformational mega-trends across technology, healthcare, ecommerce and currencies that give investors an opportunity to buy these themes in a single trade. For more information on our fund range visit our page here.
Article Date: 6th May 2020.