Private, online and hi-tech sectors thrive in the coronavirus economy

As people worldwide are forced to stay in their homes, the businesses that are helping them to adapt could lead to long-term changes in the economy

By AFP

HONG KONG • The coronavirus pandemic has sent stock markets into freefall and industries to the wall, however, many firms enabling more private, online and tech-based living are emerging as potential winners.

As hundreds of millions of people worldwide are forced to stay in their homes and not travel abroad, the businesses that are helping them to adapt could lead to long-term changes in the economy.

“I think certain aspects of work and organising will change for good through the current situation,” said Sally Maitlis, a professor of organisational behaviour at Oxford University’s Said Business School.

“People will discover that they can work and communicate in ways they previously didn’t think possible, and will be forced to become more nimble with tech through having no choice to do otherwise.”

Here are comparisons of several sectors that are thriving and failing in the pandemic:

E-commerce Giants Versus Independent Stores

Large online retailers have seen a surge in orders as self-isolating or home-working consumers turn to their massive distribution and delivery networks to provide daily essentials.

Shares in US retail giants Walmart Inc and Amazon.com Inc both tumbled as markets crashed around the world on March 16.

During the week, Walmart rose as much as 25% from its nine-month low last Monday. Amazon also recovered.

“We are seeing increased online shopping and as a result, some products such as household staples and medical supplies are out of stock,” Amazon said.

Yet small, independent stores are suffering, said UK Federation of Small Businesses chair Mike Cherry.

“These are already very difficult times for all small businesses right across the country. There are huge concerns over the supply chains while on top of this footfall continues to drop. The prospect for these businesses over the coming weeks is increasingly bleak.”

Streaming Versus Cinemas

Demand for movies to watch at home has soared so much that Netflix Inc and YouTube are reducing the quality of their streaming in Europe — which has become the epicentre of the virus — to ease pressure on the Internet.

Worldwide streaming activity jumped by 20% last weekend, according to Bloomberg News.

Traditional cinema chains, however, are facing an unprecedented drop in demand.

Some have temporarily closed their doors to help contain the virus’ spread.

US-listed shares in Cinemark USA Inc and AMC Entertainment Holdings Inc were both down around 60% last Friday from their respective highs in January and February.

Private Jets Versus Commercial Planes

The airline sector has been hit hard by quarantine rules and border closures, with UK airline Flybe crashing into bankruptcy and experts predicting others will follow.

The International Air Transport Association said last Thursday that up to US$200 billion (RM886 billion) is needed to rescue the global industry.

US airlines have sought more than US$50 billion in government assistance in recent days, with one top US official saying the outbreak poses a bigger threat to the commercial industry than the Sept 11 attacks.

In contrast, private jet charter companies are seeing demand soar. Wealthy customers are seeking to distance themselves from the “unknown” travel histories of fellow passengers, said Daniel Tang, from Hong Kong-based charter company May Jets Ltd.

US-based Paramount Business Jets has seen inquiries go “through the roof”, CEO Richard Zaher said. Queries have risen 400% and bookings are up 20%-25%.

Home Workouts Versus Gyms

As many gyms close their doors, fitness-lovers are turning to online classes and home workouts.

Shares in US home gym equipment company Peloton Interactive Inc surged as investors bet on increasing demand for its stationary exercise bikes and memberships to streaming online workout sessions.

At one stage Peloton’s share price was up more than 50% from last Monday’s intra-day low.

Teleconferences Versus Real-World Meetings

With more and more people working from home to limit the virus’ spread, demand for technology that enables online group meetings, chats and collaborations has spiked.

“There is such excitement around remote work that brands like Zoom have seen their stock value climb up,” Creative Strategies analyst Carolina Milanesi said, referring to the teleconferencing app.

At the same time, real-world gatherings from sporting events to business conferences, have been postponed or cancelled, with a large question mark still lingering over the fate of this summer’s Olympic Games in Japan. — AFP