Risk, Resilience and Opportunity: Covid-19 and its Impact on Key industries and Companies

The Covid-19 pandemic has had a devastating impact on the societies and economies we live in.  It is the first pandemic in our globalized world.  We discussed the pandemic and possible outcomes in our Insight last month, which you can find by clicking here.  

Now several weeks on, we have found that thankfully physical distancing works to flatten the curve and that even though healthcare systems in many countries have been stressed they have generally been able to cope in terms of hospital capacity and other resources. 

Infections, hospitalizations and fatalities are decreasing.  A number of reliable tests have been approved, including by Roche and Abbott, long-term holdings of ours.  Tracking is unproven although European governments have decided that a private sector solution provided by Alphabet and Apple is likely to provide greater data protection and privacy than solutions, they could provide themselves.  Vaccines will remain elusive for 12-18 months if they can be found at all despite the good news we hear.  However, therapeutics like the drug cocktails that have been developed in different places offer hope that the course of the disease can be improved and allow more effective treatment and better outcomes. 

The next months will be a tight rope walk as devastating economic numbers are reported by governments and companies but as measures to reopen economies and incremental improvement in corporate results and outlooks give rise to hope that the global economy could be back to levels similar to where it was just at the end of last year within 12-18 months.

What is clear from an investment perspective is that the Covid-19 pandemic has greatly accelerated many of the changes and disruptive forces that have been occurring. 

That is why it is more important than ever to invest in companies that offer the stringent quality we look for, with strong and sustainable competitive positions in good and growing industries, with managements with a track record of value creation and balance sheets so strong the can weather any kind of adversity.

Whether it is the inexorable shift from offline to online in so many businesses, the need for greater investment in healthcare capacity and capability, the required investment in fixed and communication infrastructure, or the increased importance of ESG issues, corporate responsibility and sustainability for companies and their customers, clients and consumers, the Covid-19 pandemic is a catalyst for profound changes that offer great opportunities for some industries and companies and terrible risks for others. 

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