What Changed with the Pandemic (And What Didn’t)

Key Takeaways

1. Digitalization Accelerated and There’s No Going Back—Businesses that developed digital techniques to serve customers and organize workforces created big competitive advantages. They should thrive as the pace of technological advancements continue.

2. Dangers of the Herd—The pandemic re-emphasized the pitfalls of following the herd. Easy money can cause problems and dull the senses to the need to diversify and invest in quality companies that may be out of favor.

3. The Value of Mass Markets—Some companies targeted niche rather than mass markets even though they initially pitched them as huge total addressable markets (TAMs). We are mostly interested in identifying companies that are successfully addressing realistically large TAMs.

4. E-commerce Growth Didn’t Endure—E-commerce exploded in every country during the pandemic but it’s no longer growing fast in every emerging market. Being selective about e-commerce opportunities is critical.

5. Renewable Energy Is a Mining Opportunity—It’s clear that in the move to the new energy economy, a lot more old-economy materials will be needed. Mining companies located in emerging markets have to be part of the solution.

6. Navigating Inflation and Capital Needs—As the pandemic grew, countries around the world turned to monetary and fiscal stimulus. In our view, the fiscal and monetary responsibility demonstrated by emerging markets indicates that these markets can provide steadier investment opportunities than in their distant past.

It’s been around three years since COVID began to shake up the world’s societies, economies and markets. As the pandemic unfolded in 2020 and 2021, it seemed its effects on human behavior would be profound and long term. While the full impact of COVID will likely take years to grasp, it’s a good moment to think about the changes to global equity markets that could be here to stay as well as the changes that may not be as long lasting as we thought.