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In ‘The world after Covid,’ a new report from BofA Global Research, Israel details five mega-trends affecting everything from geopolitics to healthcare to technology. In some cases, the virus has sped up trends that were already under way, but might have taken five years or more to unfold without the pandemic, Israel notes. And despite the health and economic devastation, many of these changes will turn out to be positive, he believes.
Ground-breaking technology research and development will be the coronavirus’ legacy of innovation, says Israel. Government priorities, for instance, could shift toward better health systems and a greater resolve to head off the looming crisis of climate change.
Here are the five trends Israel believes will shape our lives – and create potential investment opportunities – going forward.
Expect rising tensions between the US and China. Tectonic shifts in supply chains, away from globalization and toward localization, were already under way before the coronavirus. The pandemic will likely result in ‘a much faster-than-expected shift in manufacturing away from China,’ Israel says, with the goal of reducing dependence on China in critical areas such as technology and pharmaceuticals. A greater focus on sustainability and social and environmental issues is also helping drive the trend away from globalization.
The battle for technology supremacy between the US and China will likely intensify in a new world accustomed to online entertainment and shopping, and where the need for tracking data to avert future health crises is greater than ever. ‘The lasting legacy of this will be a combination of new communication infrastructure, data generation, cloud computing power and bandwidth,’ Israel believes.
The coronavirus has handed governments a newly expanded social mandate to protect their citizens. Expect greater government surveillance aimed at stemming future outbreaks, and new debates over the greater social good versus individual privacy. Governments might also influence businesses focused primarily on shareholder returns to improve worker benefits and serve the needs of other stakeholders – including a greater emphasis on solving climate change and other environmental challenges.
The coronavirus will amplify the importance of healthcare and the critical role it plays in national security and economic growth, Israel says. He believes the debate around universal healthcare is likely to intensify in the US. Globally, the push will be on for ‘a more efficient system that focuses on value-based outcomes, preventive care and greater use of technology,’ he says. Globally, look for health systems that reduce waste and emphasize value-based outcomes, preventive care and technology.
Gen Z is uniquely prepared for a new era of social distancing. As the first generation of digital natives, these younger consumers are comfortable in a world that takes place largely online. Other generations have adopted their digital ways during the lockdown. Many of these new habits are likely to stick, which has implications for business strategies going forward. On the other hand, younger consumers are at the greatest risk of reduced earnings in the wake of the crisis, he adds.
To learn more about these five post-coronavirus trends and the industries that could benefit, read the BofA Global Research primer, ‘The world after Covid’.
BofA Global Research serves individual investors and a wide variety of institutional money managers, venture capital funds, private equity funds, corporates and governments. In 2019 it connected more than 110,000 investor clients to management teams through conferences, non-deal roadshows, field trips and bespoke events.
