Prosperity in a Pandemic – Short Sighted or a Barometer of Future Trends?

Which companies have excelled so far through this pandemic?

Starting with the first question the sector to experience the highest market cap added so far in 2020 is (not surprisingly) the Information Technology. Microsoft $269.9bn leads the pack closely followed by Apple $219.1bn. Shopify, zoom video, PayPal, Adobe and NVidia all show significant net market capital gain- but why? While each individual company has a slightly different story, common themes include a sector that has been ready and able to provide critical services for a large number of people working remotely. In the case of Microsoft, the Teams app quickly became a way of workers keeping in touch, and the Azure cloud platform has become critical for many companies. Microsoft even benefited from people spending more personal time online as record 90 million players tuned in to the Xbox live gaming service in April. In the case of Apple, even though the majority of their 500 stores were forced to close it still managed to release the new iPhone, iMac and iBook air models, thus encouraging even more ‘time rich’ customers into wearables and upgraded services whilst working from home.

Healthcare is another sector that has done remarkably well so far in 2020, with obvious winners including companies that have been tasked with developing vaccines for Coronavirus. Chugai, the Japanese unit of Roche, and producer of the rheumatoid arthritis drug ‘Actemra’ have been trialling Actemra in the US and Japan as a potential treatment for very ill coronavirus patients. Including sales of the haemophilia drug Hemlibra Chungs profits rose to the level sufficient to make it arguably Japans most valuable drugs manufacturer. Lesser known Mederna (accumulating $20.1bn market cap added) is the first US pharmaceutical company to get a potential coronavirus vaccine to human trial, just a mind blowing forty-two days after receiving the genetic sequence of the virus.

Personally, I’ve had a few bad experiences whilst drinking Moutai and entertaining clients, but amazingly the producer Kweichow Moutai has added a ‘staggering’ (no pun intended) market cap of $35.5bn in the first quarter of 2020. The reason for this is simple; in 2019 a shortage led to the decision to increase production by 30%, but in the same period China’s rich (the main customer) more than doubled over the same period. Once the Chinese economy reopened this spirit often used to cement (or should I say lube) business deals experienced a very significant boom.  Other sectors in 2020 that are showing vast levels of market added include; Communications Services (Netflix, Tencent, Facebook, T-Mobile, Alphabet), Materials (Newmont), Industrials (ASML), Utilities, Real Estate and Financials.

There are very serious and pressing considerations that could shape our lifestyles and values moving forward. Potentially such considerations may affect the future trends of business and commerce in a much more pronounced way and on a much more significant scale than our experiences of 2020 so far. If we consider the human races ability to adapt, radically change, and potentially prosper in the face of the recent adversity, then it is not unreasonable to assume that given the will (or in fact no other choice) humanity can finally face up to and take the measures necessary to save our environment, resolve inequalities, and start to finally address the obvious failings of globalisation. The recent fortunes of sectors provides a strong indicator to where short term opportunities lie, but our gut feeling is that longer-term priorities and subsequent trends are likely to be shaped by plans for a sustainable longer-term future.

*Data between Jan1st & June 17, 2020, Capital IQ