Positive Themes After COVID-19

COVID-19 has turbo-charged how we use and exchange technology in an unprecedented and irreversible way.

As cities around the world went into lockdown, people turned to technology to connect with others. In many ways, this shift has profoundly changed our daily lives and the way we interact — from shopping to entertainment, working and learning, and we believe its impact will be long lasting.

In our consolidated report of ‘Positive Themes after COVID-19’, we look at how COVID-19 has reinforced and accelerated the online retail, digital leisure, remote learning, remote working, and the global contactless economy sectors.

POSITIVE THEMES AFTER COVID-19 SECTOR OVERVIEW:

ONLINE RETAIL

The COVID-19 pandemic has fundamentally shifted an already rapidly changing retail landscape. The severity of quarantine measures globally has accelerated the extent to which online shopping is utilised, including by previously reluctant demographics, with over 2.1 billion shoppers expected to purchase goods and services online by 2021.

As a global industry, total retail market growth appears steady at around 4% per annum through to 2023 from a total market of US$25 trillion as of today. Between now and then however, e-Commerce is expected to nearly double to US$6.5 trillion and account for 22% of US$29.7 trillion global retail sales.

DIGITAL LEISURE

The COVID-19 pandemic is expected to significantly transform how people spend their leisure time well after the virus passes. Digital technologies will transform the existing process of work and play with substantially less physical contact and cheaper marginal unit cost per good and service.

A large portion of digital content is consumed on mobile devices given its versatility and convenience. Video streaming, music, gaming and live streaming make up 43% of all time spent on mobile devices in China. Online gaming has exploded with 30% of surveyed U.S. consumers subscribing to a gaming service and 41% playing either daily or weekly. We note more Millennials now have an online gaming subscription than a traditional pay-TV service.

REMOTE LEARNING

The COVID-19 pandemic has caused major disruptions to the global education system and by sheer necessity forced it to alter how it approaches and conducts its learning techniques. The global education market increased from US$4.4 trillion in 2012 to US$5.9 trillion in 2018. It is estimated that global spend on education will further grow to US$10 trillion by 2030 – a compound annual growth rate (CAGR) of 4.5% from 2018. However, only 2.5% of the global education market was digitised in 2018 and we expect a marked shift towards online learning over the coming years.

In China, online education has seen robust growth from improving infrastructure and school suspensions from COVID-19. According to China’s internet network information center (CNNIC), the number of online education users in China reached 423 million in March 2020, nearly double year on year.

REMOTE WORKING

The COVID-19 pandemic has brought about the biggest work experiment in history. To an extraordinary extent, remote working has now become – through necessity – normalised for a wide array of professions.

This forced experiment has allowed us to critically examine the benefits and deficiencies of working from home. From this vantage point, we can see that the technologies and services aiming to facilitate the interactions workers have through computers and mobile devices via remote desktop and remote access software have instantly become the required standard, which also benefits the hardware-related cousins in terms of the physical equipment required to work from home.

GLOBAL CONTACTLESS ECONOMY

On our estimates, the global contactless economy enabled by technology advances could double to around US$300 billion in 2024 from US$147 billion in 2019.

We have identified key technology segments, which underpin the development of these applications, and should be prime beneficiaries of rapid developments toward a contactless economy. We see the AI (artificial intelligence) ecosystem as the most important technology for natural user interfaces, enabled by developments in voice recognition and natural language processing (NLP), as well as computer vision. Sensor technologies are also set to benefit with the most notable innovation in time-of-flight 3D sensing to be propelled by upgraded iPhones. Semiconductors, as the engine of AI computing, sensing and connectivity, are also unavoidably linked to this strong growth thematic.

LEARN MORE

To access the detailed report with our top international stock picks within each of the five sectors, login to Client Access or get in touch with your Bell Potter adviser. Alternatively, call 1300 023 557 to organise an obligation free discussion with one of our experienced advisers.

Authored by Peter Quinton – Head of Research Services at Bell Potter Securities, December 2020
This is an excerpt from our consolidated Positive Themes After COVID-19 report, originally published on 3 December 2020.
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