Australian Industries That Will Profit From Coronoavirus
The Covid-19 pandemic has caused massive damage to the global economy, but now that we are over six months into the pandemic, the fog of confusion is thinning. We are starting to see the extent of damage that the pandemic can do and also the opportunities that are being created.
In light of recent events, a need for a paradigm shift has risen. Covid-19 has proven to be a black swan event for the global economy and geopolitics. Before the pandemic, China, for instance, was passive, but the pandemic has apparently changed the Chinese foreign policy into an actively aggressive policy. Similarly, the economy too is going through a transformative phase where the emerging trends and patterns are showing that the changes that were expected to occur in the next five to ten years have been expedited. For example, working from home phenomenon has changed the way executives saw workplace. Many businesses that maintained costly offices have realized that they can work with similar efficiency with the minimum office staff. Schools and universities have been able to continue their operations online and this has changed the way policymakers looked at education.
The pandemic has also changed the flow of capital to industries and markets that were previously not at the forefront of investment opportunities. For example, many countries realized that they do not have enough medical equipment and ventilators. They are now making their own ventilators instead of importing them because the backlog on the import orders is too enormous and they cannot afford to wait.
Covid-19 pandemic has therefore proven to be a global disruptive event, but the good thing is that humans have existed through multiple pandemics in the past, and we have evolved to survive. The initial impact on the economy was devastating, and the coming crisis is going to be crippling, but there is also a glimmer of hope, in the form of industries that are emerging through the crisis and proving to be the major hubs of investment in the coming future.
So let us take a look at the 5 industries that have emerged during the pandemic.
The pharmaceutical sector is by far and without any doubt, the most important sector that has emerged in the pandemic. The pharmaceutical sector is carrying the hope of humanity for fighting against the coronavirus by developing an effective vaccine. For this reason, millions of dollars have been invested into the pharma sector for the research and development of medicines and vaccines that may help treat the novel coronavirus.
Not only coronavirus but the way this pandemic has spread has raised concerns for other viruses and for this reason, the pharmaceutical sector will need to be bolstered so that it can have the capacity to develop and distribute medicines and vaccines for other viruses and diseases in the future.
If we look at the performance of the pharmaceutical sector, then this graph shown on the Financial Times site shows just how well the sector has reacted to the pandemic.
While the S&P 500 index crashed in march due to the pandemic, the pharmaceutical sector endured as it saw a steady flow of investment. In USA companies like Gilead Sciences, Moderna, Johnsons & Johnsons are directly competing in the vaccine race, but on a global level, countries too are not only competing but also pooling in their resources. Countries like Canada, USA, UK, China, Japan and Russia are all trying to find out a vaccine that will give the vaccine maker a competitive edge over every other country.
Competition here, however, is not bad, as we have seen that the best innovations come forth when we compete with each other. It may be possible that as a result of this competition, by the end of this year or next year, we may have multiple effective vaccines against the virus. For now, however, the health and pharma sector is winning by every possible indicator of the market. So if you are looking to invest in stocks, then the health sector should be a safe bet for now.
The work from home and social distancing phenomenon has also created a lot of opportunities for the eCommerce industries. The bulk of global purchases have shifted online since the pandemic broke out. In fact, while other sectors are downsizing and laying off their employees, the eCommerce industry has been hiring employees at a rapid rate. Amazon was one of the first companies to start hiring thousands of workers in the USA and other countries, as they felt pressured by an increase in demand for online purchases.
Similarly, other online retailers and sellers have felt an increase in demand, and this has created a market for e-commerce related jobs. Online grocery shopping, delivery services and telemedicine have emerged has pillars in the fight against the virus, these services have allowed people to avoid unnecessary travel and contact with others, to limit and reduce the spread of the virus. In countries like China and Italy, eCommerce services played a key role in making sure that the people had the necessary supply of goods to help them last the lockdowns and quarantines.
The graph shows how the search for online grocery and telemedicine services increased along with the cases of the virus. This increase in demand also resulted in an increase in investment coming into the eCommerce sector, to maintain the supply, making the eCommerce sector one of the most resilient sectors during this pandemic.
Finance and Digital Payments sector
No matter which way the global economy goes, the finance sector is always going to be at the helm of affairs since every economic activity generates money. The pandemic has increased the emphasis on the transition of the global economy towards a cashless model where digital payments through cards and cryptocurrencies will be the norm instead of cash, which is soon set to become outdated.
The returns of companies in the digital payments sector such as Visa, Mastercard, PayPal and Apple have increased by over 11%. Cryptocurrencies have also generated a lot of traction since the pandemic began because this financial crisis was their litmus test and they seemed to have passed it. Moreover, the failure of the global financial system such as low-interest rates, bankruptcies and lack of investment options in the conventional economy have also propelled the rise of blockchain-based investment solutions that appear to be more promising than the traditional options. The finance and digital payments sector is surely the one to watch for.
One of the most in-demand sectors has been the tech sector. Lockdowns and working from home has caused an unprecedented rise in the demand for cloud computing services and communication apps such as zoom. This, in turn, has led to a rise in the demand for servers and manufacturers who produce chipsets that are used to make servers and other equipment.
This change or shift should be seen as irreversible because even if things go back to the way they were, this shift is not going to reverse. The last few months have made executives and managers realize that they can run their operations in a much more cost-effective and efficient manner by going office less and implementing working from home protocols.
Freelancing has emerged as a significant employment puller in 2020. The developing economies in South Asia, Africa and South America have in particular taken the lead in the race for supplying the market with freelancing experts from every field. As unemployment increases, talented individuals are looking at new ways to seek employment and beat the market.
This has created disruption in the employment market. For places like Europe and USA, the influx of talented freelancers means cheap but highly qualified labour without any strings attached, and for the freelancers, this means a lot of exposure and an opportunity to earn a steady income at a time when global unemployment is rising.
Read More: The Australian Economy – How Does It Work?
So, these are the top five industries that have braced the impact of the virus, and they now stand to profit from the pandemic as it continues well into the second half of 2020.
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