Three sectors that stand to benefit post-pandemic
5 September 2020
Businesses will endure a period of intense competition as they seek to recover from the aftermath of Covid-19 but there will continue to be opportunities for investors, says Paul Craig, portfolio manager at Quilter Investors.
According to Craig, three sectors stand to benefit from the shift in post-pandemic consumer behaviour; sustainability, automation and Chinese consumer.
Craig says: “Coronavirus has had a profound impact on the way we live and work. We very much expect these changes to become permanent and businesses are going to have to keep up. As economies reopen around the world, it is going to be a case of survival of the fittest.
“The fight for consumer spending is going to be intense and unfortunately not every business is going to survive. Some of this will be as a result of sectoral changes, while some will be as a result of the renewed competition. Long-term opportunities will present themselves to investors and they can take advantage of the new environment.”
Craig says the crisis has placed a renewed emphasis on the actions and societal impact of corporates, with investors particularly focused on how companies have behaved during this period.
Craig explains: “This drive to ESG investment will result in those companies already committing themselves to progressive policies doing well out of the pandemic and will cause the others to sit up and take notice.”
Craig also believes automation as an investment theme will evolve and accelerate, with the biggest opportunities within factories and manufacturing.
He says: “Businesses are being forced to introduce social distancing on the production line, which means less staff, while many have had to make staff redundant to keep costs under control. This means further automation of tasks will be required to pick up the slack and none of it is likely to be reversed once normality is restored. As such this is a theme that will play an even greater role in the global economy for years to come.”
Lastly, Craig expects Chinese consumer demand to present opportunities, with the country being the first to emerge from the crisis and the growth of the Chinese middle class showing no signs of abating.
Craig adds: “With wealth increasing and China’s urban centres continuing to grow, we are likely to see increased consumer spending. Global businesses aimed at taking advantage of this cohort stand to be the big winners out of coronavirus as people return to the shops.”
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