Prime Minister Lee Hsien Loong addressed the nation on Sunday (Jun 7) on Singapore’s future in a post COVID-19 world. I found the message sobering and it also made me wonder about the investment climate beyond COVID-19. Which sectors and companies will not only survive the crisis, but thrive post COVID-19?
Below is the video of the speech from CNA:
Let’s look at some of the key messages from PM Lee and consider what they mean for our investment.
Marco trends change and we need to adapt
We will have to learn to live with COVID-19 for the long term, as we have done in the past with other dangerous infectious diseases, like tuberculosis. We also have to get used to new arrangements in our daily lives. We must all adjust the way we live, work and play, so that we can reduce the spread of the virus, and keep ourselves safe.
COVID-19 was the Black Swan event of our generation. This is a trend changer. So we will need to review our existing investments. Therefore we should ask which businesses will not only survive the downturn but thrive in the new world? Do they have strong product lines and services which continue to be in demand? For example, we will need masks and vaccines to stay safe and healthy.
Saving for a rainy day
We are injecting almost S$100 billion – 20 per cent of our GDP – the largest fiscal intervention in our history. Unlike other countries, we can draw on our reserves, and do not have to pay for our support measures by borrowing. But even for us, this level of spending is hard to sustain
The Singapore government unveiled 4 budgets amounting to S$100 billion. This was due to its strong financial situation and reserves saved over many years.
For individuals, personal finance is very important. This means personal budgeting and setting aside an emergency fund for a rainy day. The economic outlook ahead is gloomy and retrenchments will increase. We need to be well prepared to weather the storm. During the downturn, we can continue to invest in our own skills/knowledge and good businesses.
Some industries will change forever
We will not be returning to the open and connected global economy we had before, anytime soon. Movement of people will be more restricted. International travel will be much less frequent. Health checks and quarantines will become the norm. It will no longer be so easy to take quick weekend trips to Bangkok or Hong Kong on a budget flight. Industries that depend on travel, like aviation, hotels and tourism, will take a long time to get back on their feet, and may never recover fully.
During the circuit breaker, many businesses closed down. We will likely see more closures in the coming months. This will lead to rising unemployment.
Companies in some sectors like retail, travel, aviation and tourism will have to transform or get left behind. Experts predict the recovery may take at least 18 – 24 months. The International Air Transport Association (IATA) released a report on the impact on the aviation industry recently. The pandemic will separate the winners from the losers.
New industries will flourish
Developing plans for our Future Economy, investing heavily to upgrade our workers through SkillsFuture, digitalising both the private and public sectors, building our innovation and R&D capabilities. All this has enabled us to stand out in Asia and the world.
Digitalisation is the buzzword of the new economy. Singapore is already making a major push into digital payments. As investors, we should pay attention to the trend. Some sectors which will benefit in future:
- Digital payments channels like Paynow, Grabpay and even digital currencies. China is coming up with their own digital currency.
- Cybersecurity will become crucial as more people use cashless payments.
- Digitalisation will create big data requirements. This will result in huge demand for storing, processing and analysing data.
- Communications channels will become critical. 5G network is already in the works. It is touted as the next big wave which enables many applications that could not be used previously.
The road ahead is full of challenges and opportunities. As investors, we need to look beyond the current crisis and discover gems for long term investing. Stay safe!