Impact of COVID-19 on the wider economy

COVID-19 has caused much disruption to the economy, with global stock markets suffering dramatic falls. Early estimates also predicted that should the virus become a global pandemic, most major economies will lose at least 2.4 percent of the value of their Gross Domestic Product over 2020.

Here at Huxley Singapore, we invited two well-esteemed guest speakers – Ronny Grosman Owner & MD of Blackwood Capital Group, Andrew Quah MD of Cresco Group – to share with us what the economic impact has been, and what other areas would be impacted, along with some long-terms perspective over a webinar moderated by our Associate Business Manager, Yik Jia Hao on “The impact on our wider economy over the next 18 months?

Below is a summary of some of the key points discussed during the webinar. You may also choose to watch the recording of the webinar here:

What are the current trends?

Between late Feb and Apr 2020, financial markets from the US to Asia and Europe have been whipsawed as investors have grown concerned that COVID-19 would create a global economic and financial crisis with few metrics to indicate how prolonged and extensive the economic effects may be. As such, investors started looking for safe-haven investments but even the U.S. Treasury 10-year security experienced a historic drop in yield to show 1% on March 3 2020 while the Bank of Japan engaged in asset purchases to provide short-term liquidity to Japanese banks. Japan’s government indicated it would also assist workers with wage subsidies.

As such, what are some challenges and opportunities for businesses and individuals with such volatility in the market?

 

Challenges and opportunities

COVID-19 is driving market volatility and changes in asset valuation on a daily basis. It may also change how investment managers run their investment operations. Even investment managers with long investment time horizons occasionally need to feed their investment decision processes with information that is refreshed faster than the timing of their standard process. Priorities are now shifting towards longer-term issues such as modernizing the investment decision process.

This is a severe downturn that will last for quite some time, with volatility, and growing unemployment rates. Businesses who want to continue doing business-as-usual will need to take into consideration, the health of employees and how best they can put this as their first priority.

As such, we highlight some of the key dilemmas and questions our participants had asked from the webinar below.

Common concerns in light of COVID-19

  1. How will this impact other industries?

There are huge differences across industries. The healthcare industry for one is experiencing a rise in revenues, but there are challenges like logistics and demands in supply chain. On the other hand, there are huge shifts in the hospitality sector with social distancing and new ways of working remotely. Mergers and Acquisition (M&A) firms are looking at combining businesses that are hit hard by the pandemic where innovation will be essential.

  1. Have valuations reduced in private investments?

People are becoming more realistic about valuations, and this is not just within private investments but with real estate developers. The impact of high liquidity is prevalent with deflation. Defining what the push and pull factors are at the moment is difficult. It can boil down to something as simple as spending behaviours of consumers today in light of the pandemic.

  1. Impact over the next one, three and five years?

In the short-term, if you are well capitalised, opportunistic deals are definitely available and something you can focus on, along with damage control and cost-flow within a year. In three years, businesses will need to think about the changes they will need to take in light of the crisis. In the next five years, focus will definitely be on the returns on investments and expectations for businesses. Nonetheless, it is still difficult to foretell given the volatility of the market.

 

Will the world require a new monetary system with national, corporate and public debt? Find out more in the recorded webinar as our speakers touch on many insightful questions from our audience. 

 

We can help

As we navigate through the course of this pandemic, the jobs market is set to change time and time again. We aim to keep you as informed and up to date as possible whilst supporting you with your respective hiring and job seeking needs throughout this challenging time. Therefore, we recommend you keep an eye on our LinkedIn for regular updates. Please feel free to get in touch to discuss any concerns you may have or to find out more about the recruitment services we offer. If you are looking for the next step in your career then keep an eye on our live roles.

 

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