Covid-19

[weijian]

As humans do, we will probably all revert back to our old habits (probably with some new ones added). So eventually, we will probably all go back to buying what we want, eating the good food and also resuming our 21st century experiential treats.

However, in terms of corporate behavior, i am suspecting certain things may permanently change. For examples:

(1) Under unexpected circumstances, a company is forced to operate with less people. If it works out, wouldnt that mean better efficiency? Will the overall job market actually expand slower than it was supposed to be, compared to a no covid-19 alternate reality?

(2) With the usage of online collaboration and teleconferencing tools (ZOOM, Microsoft TEAMS, Slack etc), corporate travel and stay will probably not resume back to its former level for a very long time. With new tech tools becoming mainstream, I suspect it will become harder and harder to justify these discretionary spending in future (even from a zero cost budgeting perspective)

(3) If people realizes alot of office jobs can be done from work, will there be mandated WFH days in future, or does it get less taboo to stay at work and WFH? What is going to happen to those choice office locations and their supporting industries (eg. F&B establishments that depends on the lunch/after work crowd)?

(4) The new sharing economy sowed its nurturing roots in the last crisis (GFC 2008). It was a good pitch selling to investors at high valuations because you don't own the capex (rooms, cars etc) nor need to pay insurance for the employees (they are "contractors"). With a taboo seeded from this social distancing measures, will its halo effect be severely diminished after this crisis?

(5) Companies who try to maintain an efficient capital structure and optimized inventory, and even preach them due to the higher ROE/ROICs/ turnover ratios etc. Will their head honchos be nudged to borrow less and have more cash reserves in future? This will probably mean more conservative balance sheets, holding more inventories, and less desire to optimize it to the max?

Coronavirus: how much of Covid-19’s social distancing is here to stay?

People will gladly resume some old habits when coronavirus restrictions are eased, but some of the new ones may stick

https://www.scmp.com/news/china/society/...19s-social

[Behappyalways]

Coronavirus can survive long exposure to high temperature, a threat to lab staff around world: paper
https://www.scmp.com/news/china/science/...ure-threat

[weijian]

Most of us will either believe the Fed has done a great job of doing what it said it would do ("whatever it takes"), or it is simply sowing the seeds for the next crisis and creating moral hazards.

Mohnish Pabrai: A Bull's View in a Virus Shop

What do you think about the sheer scale of the fiscal stimulus and monetary actions by the Fed? Are we digging ourselves into a deeper hole or do you think these measures will provide the necessary jolt businesses and consumers need to get through the crisis?

I give The Fed 10/10 on their response. Amazing!

https://sumzero.com/headlines/business_s...nishprabai

[Curiousparty]

Mr Market has yet to take note that, actually for sectors not adversely impacted by COVID19 (e.g. iFast, Boustead, etc) , the govt subsidies would go straight into the net profit of these companies or aka free windfall from GOVT!!!

[donmihaihai]

Mr Market has yet to take note that, actually for sectors not adversely impacted by COVID19 (e.g. iFast, Boustead, etc) , the govt subsidies would go straight into the net profit of these companies or aka free windfall from GOVT!!!

1% to 3% of their market cap base on your calculation. 

The impact? Negligible.

[Curiousparty]

https://on.mktw.net/2XJPClF Check out this article from MarketWatch - A treatment for the coronavirus would be priceless — and worth about 5,000 points in the Dow Jones Industrial Average


It is a matter of time that a vaccine will be developed and widely disseminated.

Bulk market will be resumed ...


Sent from my iPhone using Tapatalk Pro

[Curiousparty]

Mr Market has yet to take note that, actually for sectors not adversely impacted by COVID19 (e.g. iFast, Boustead, etc) , the govt subsidies would go straight into the net profit of these companies or aka free windfall from GOVT!!!

1% to 3% of their market cap base on your calculation. 

The impact? Negligible.

for iFast and Boustead  and the likes, the govt wage support may amount to as much as one third of their full year earnings since wage cost is quite a sizeable portion of expenditures

these companies are not adversely affected by COVID19 unlike hospitality, air lines, retail F&B .

[dreamybear]

Most of us will either believe the Fed has done a great job of doing what it said it would do ("whatever it takes"), or it is simply sowing the seeds for the next crisis and creating moral hazards.

Mohnish Pabrai: A Bull's View in a Virus Shop

What do you think about the sheer scale of the fiscal stimulus and monetary actions by the Fed? Are we digging ourselves into a deeper hole or do you think these measures will provide the necessary jolt businesses and consumers need to get through the crisis?

I give The Fed 10/10 on their response. Amazing!

https://sumzero.com/headlines/business_s...nishprabai

This is a good read; thanks for sharing.

I do have the same view as him generally except that I do think the massive QEs has brought about huge asset inflation in recent years e.g. in property and stock prices. In particular, I do not forsee our private local property prices dipping back to early 200x prices nor DBS $7+ / OCBC $4+ in Yr 2009, despite the whole world may go into a recession this time round. Nevertheless, it could happen IF another black swan appears besides this current bad swan - not sure whether there is an existing theory as TWIN black swans, but as an investor, we need to be prepared for different kinds of scenarios, right ?

My perspective is the worst is probably going to be over soon as the situation is better now as countries gradually learn to cope with the virus compared to the first onset. Humanity's way of life will return to normal sooner or later. However, the irrational Dow indices may test its Mar lows again for whatever strange reasons. Yes, there will likely be overleveraged companies going bankrupt but once the lockdowns subside, the economies will slowly restart again. And when there is a sure sign of vaccine / cure, the Dow will likely hit new all time highs. As long as US is the world power, it can take on infinite debts and continue its money printing prowess to overcome crises.

[Bibi]

[quote pid='157483' dateline='1587200272']
However, the irrational Dow indices may test its Mar lows again for whatever strange reasons.
[/quote]

If Dow test it Mar lows, our rational STI index will drop below our Mar lows for the same strange reasons.

[Behappyalways]

The covid19 has already triggered the black swan. Many people has just been looking at the covid19 and thinking that once it is solved, things will be back to usual again. But bear in mind Covid19 is just the TRIGGER.

With lockdown, the US market will face a mortgage issue soon where house owners cannot pay up and property value plunge. Trump has been trying to 'push up' the oil price. Why? If I remember correctly the oil companies in US have around a few hundred billion of debts and they need US$45 for shale oil companies to break even. If these companies go under, individual banks in US providing a few billions in loan provisions for this quarter will have big troubles. Not to talk about other issues like mortgage. Covid19 is the TRIGGER for the chickens to come home to roast.

In Singapore the collapse in oil price, we have our Hin Leong. Sit tight the chickens have come home to roost.


https://uk.finance.yahoo.com/news/singap...11932.html

My two cents worth