4. ESG Accelerated
We see the coronavirus crisis as a defining moment for ESG (environmental, social and governance)-related investing. The way individual companies have behaved toward society in this crisis will be remembered, and business will favor those deemed to have done the right thing by their employees, customers and communities. At the same time, coronavirus has reminded us that when it comes to human vs. nature, the upper hand often goes to nature. To the extent humans see the importance of having a healthy respect for nature, that could be a pivot point for environmental considerations such as climate change.
We see ESG as an enduring market theme. It is no longer only about controversies and downside risks but will increasingly impact company fundamentals and valuation multiples. Investors, it seems, are paying attention: Sustainable strategies have outperformed in the recent downturn and continue to attract inflows.
5. Slow Ease Back To Leisure
Leisure is likely to be depressed for quite a while as virus concerns weigh heavily on hearts and minds worldwide. Once a vaccine is in place, however, we expect to see a healthy rebound in leisure travel. As the world returns to “normal,” people will want to get out and experience life to its fullest again. History is worth revisiting here: The 1918-1920 influenza pandemic coincided with the end of WWI, which was followed by the roaring 20s. There is a palpable desire to forget.
Work-related travel may be another story. Company managements now have real-time evidence that video conferencing is both an effective and economically efficient alternative to in-person meetings and events. Business travel may never return to pre-pandemic levels.
The day will come when coronavirus is a memory. We are all in anxious wait. And when we view this time in hindsight, I do believe it will be characterized as a buying opportunity for stocks. This is one thing that truly sets active management apart ― the ability to look beyond the current moment, think critically about the world and invest in its future potential.
Tony DeSpirito is CIO of US Fundamental Activity Equity at BlackRock and Portfolio Manager of the BlackRock Equity Dividend Fund.