We always believe with any economic condition, there are always opportunities that are worth considering. Although, these opportunities may be very limited and require further due diligence to benefit from it. We highlight below some of the areas where opportunities may be found.
• Greater use of technology – As we all adopt ‘isolation’ in our homes, those working from their homes are adopting greater use of technology which means you would expect an increased use of video conferencing facilities and other communication methods. One such company that could see a rise in demand for their services is Loopup Group Plc. Moreover, companies engaged in hardware e.g. laptops, headphones etc and software e.g. networking, cyber security etc should also benefit from such change.
• Accelerating e-commerce adoption – Online shopping is proving invaluable in this time of need, with more consumers including those who may have initially been resistant to shop online opting for home delivery. The COVID-19 outbreak appears to be a catalyst for changing consumer behaviors that will both accelerate the pace of adoption and raise the ceiling of what can be transacted online. Businesses that offer online shopping are better placed to sustain and even grow through this challenging period, although, this is subject to organising their teams effectively and the postal or delivery service working as normal.
• Pharmaceutical and Healthcare providers – We have seen that the healthcare systems around the world have been overwhelmed as a result of COVID-19. A lot of the healthcare and pharmaceutical firms should benefit from this, one such company is Roche which is part of the key holdings of Aberdeen Islamic Global Equity fund. They have been granted the FDA emergency use authorisation for commercial test for SARS-CoV-2, which will enable expedited coronavirus testing to meet urgent medical needs. Moreover, some smaller companies like EKF Diagnostics Holdings Plc, Omega Diagnostics Group Plc and others could possibly benefit from the current environment.
• DIY! – As a lot of the people isolate at home, you would expect individuals to entertain themselves with TV, books or video games – but after a while people do get bored and start looking for jobs to do at home! It could be a fixing a cupboard or a door, doing some gardening or painting/decorating a room etc and that’s where potentially a lot of the DIY companies like Kingfisher (owners of B&Q, Screwfix) could expect some demand. It was reported on March 31, that B&Q had to take down its website due to an ‘unprecedented’ number of visitors trying to order goods online.
• Some structural changes that may emerge from the crises – As the global supply has been affected, the trend shifts away from globalisation and toward localisation may accelerate, which may mean a lot more jobs in North America and Europe. Moreover, overtime a lot of the companies hugely reliant on China for their goods may seek to diversify their supply chain amongst other competing economies or where practical and efficient come closer to end users. This is an area to monitor over the coming months.
In general, companies that have recurring income and are non-cyclical may be better placed in this environment. As one would expect, companies selling essentials items like hand sanitisers, toilet rolls, pasta etc have seen revenues increasing!
The key thing is to ALWAYS DO THOROUGH DUE DILIGENCE before investing!
NOTE: Nothing in this article should be construed as investment advice.