Which Businesses Would Benefit From The Coronavirus Outbreak
The coronavirus epidemic could have a negative impact on almost all sectors of the economy and lead to a global crisis. However, I found out which areas of business would benefit from this situation…
Analysts have already started talking about the possibility of coronavirus to provoke a new economic crisis. Due to the spread of the disease in China, factories of major companies, including Airbus, Boeing, and Safran, have closed, and a number of companies have suspended operations. All of this could lead to serious losses for firms in a wide range of industries, from airlines and winemakers to luxury goods manufacturers.
But for some companies, this situation could help, at least in the short term.
Some Play, Others Win
The spread of coronavirus can spur the development of the online gaming industry. An analyst of brokerage firm Nomura Jalong Shi notes that most of the existing Chinese market games-blockbusters from January increased the average game time and the number of purchases.
The game Honor of King, released by Tencent during the Chinese New Year, has crossed the threshold of 100 million active users per day (the usual figures for it are 60-70 thousand users). Most likely, the popularity of the games will not fade away for some time: most training sessions have been postponed, namely, students constitute the main audience of mobile and online games.
Shea notes that among Chinese internet companies, the shares of Tencent Holdings and NetEase (both engaged in online gaming) show some of the best results on the exchange.
The attendance of social networks and various entertainment sites has also increased. But for such companies, increasing the number of users will not necessarily lead to higher revenues. Although the traffic of such sites has increased, most advertisers in the conditions of coronavirus-induced uncertainty adhere to marketing budgets.
Andrew Sullivan, director of Pearl Bridge Partners, a Hong Kong-based financial services group, said on CNBC that online retailers and delivery services can benefit from coronavirus development. Such a forecast looks logical: because of the recommendations of the authorities and fear of getting infected, people try not to leave home again, but they still need products and everyday goods.
On the other hand, the emergence of quarantine zones in China and the closure of roads may limit the possibilities for online retailers and delivery operators.
Due to extended vacation periods in educational institutions and companies, delivery services, with the majority of customers being students and office workers, may also feel lower demand. And the closing of many restaurants has limited the choice of dishes available.
In addition, demand for delivery services may decrease for fear of being infected by couriers. To reassure their customers, KFC and Pizza Hut have launched contactless delivery in China (the courier pulls up, waits for the customer to arrive, then departs a few meters and waits for the customer to pick up their order). The same measures are used by the largest delivery applications in China Meituan and Ele.me. Couriers are also required to wear masks and disinfect their hands with a special solution.
Shea also notes that despite all the difficulties, logistics companies can use a difficult period to improve the perception of their companies. For example, JD Logistics (owned by JD.com) and SF Express (part of SF Holding) are often mentioned by charities as they help deliver everything needed by medical teams fighting the disease. This approach can increase brand recognition for companies.