"Corona Dividend": Targeting the positive aspects of the pandemic

The year 2020 will be marked by the corona pandemic, recently exacerbated by the risks of the "second wave". Despite the greatly increased uncertainty, however, it is worth taking a look at possible opportunities: "The first major pandemic of the new millennium also has positive long-term effects that should not be ignored right now," says Dr. Heinz-Werner Rapp, founder and head of the FERI Cognitive Finance Institute. Constructive effects can also be expected, especially in the areas of economy, environment and politics. In selected sectors, there could even be a real "corona dividend", which is already becoming apparent in some cases. In a current investment matrix, the FERI Cognitive Finance Institute illustrates particularly attractive developments (see chart).

Economy: Corona as a digitisation accelerator

In particular, the digitalization of the economy would be further accelerated by the pandemic. The corona effect will force many areas to adapt to digital structures and business models. "Even if this process is painful for many companies at first, it should lead to higher productivity, lower transaction costs and overall significant efficiency gains within a short time," said Rapp. According to the FERI Institute, entire sectors and business models are being "disrupted" by the corona crisis, while - based on innovative technologies - new types of industries and companies are emerging as winners of the future. Among the clear winners are, for example, the medical technology, robotics, data security, e-learning and nutrition/al alternative food sectors (see chart). The latter sector in particular will develop into a new megatrend. Plant-based protein carriers or meat cultivated by biosynthesis as well as new forms of agriculture are likely to enjoy broader social acceptance and consequently higher demand in the future: "Consumers' sensitivity to conscious and sustainable nutrition has increased during the crisis; alternative food is therefore clearly a strategic winner," explains Rapp.

Environment: Corona shock as investment boost

CoViD19 also has long-term positive effects for other areas of the environment: CO2-intensive cruises, air travel and mass tourism would permanently lose turnover. Increasing use of Web conferences and more work in the home office reduce the general traffic volume and the health-endangering overloading of city centres. The introduction of environmentally friendly technologies is also gaining new momentum: "It is not without reason that more e-cars were registered in Germany in the Corona year 2020 than ever before", Rapp emphasises. Added to this is the effect of massive government aid programmes, some of which are explicitly directed into areas with positive environmental and climate effects. "In many sectors, this will result in important start-up financing, which will lead to further investments in climate protection and decarbonisation", Rapp expects.

Politics: Pandemic exposes populists

The Corona crisis also released positive energy in politics: populists were massively discredited; visible for example in the USA, Great Britain and Brazil. The catastrophic infection figures and death statistics there are directly attributable to the negligent handling of the virus pandemic by populist heads of government. "Corona ignorants such as Donald Trump, Boris Johnson and Jair Bolsonaro have failed blatantly in the crisis, thus clearly exposing the weaknesses of clumsy populism. The Corona dividend will come about when a return to a rational and fact-based political style is made in the future," Rapp is convinced.

"Corona dividends" can reduce risks for investors

For the time being, the overarching investment perspective continues to require strict monitoring of global corona risks. However, the prospect of possible "corona dividends" may help to better cushion these risks in the future. Investors should therefore focus more on the positive aspects of the corona pandemic and look out for future winners.

Graphic: Development of innovative industries and business models according to Corona

This investment matrix evaluates the most important trends in terms of their medium and long-term attractiveness. 

The FERI Cognitive Finance Institute already presented a detailed scenario analysis in April under the title "What does the CoViD19 crisis mean for the future? At that time, the Corona crisis was already seen primarily as an opportunity to specifically address new or further strongly growing megatrends and the associated investment themes.