I thought I’d start a thread like this, since there isn’t one yet?
The first companies that naturally come to mind for me are those that manufacture health products and medicines, such as Orion. But surely teleoperators (Telia and Elisa), for example, are also strong sacrificial lambs right now. Data usage and calls will probably increase.
Banks have certainly also benefited from commission income as securities trading has increased. But credit losses and domino effects are at least somewhat haunting, but Q1 results have probably not suffered yet, perhaps quite the opposite. Edit: Of course, banks have fair value changes included as a bad item if the markets remain significantly lower.
But above all, I’m now interested in thoughts on which domestic companies could be relative beneficiaries if geographically other competitors suffer from closures or similar measures.
How about Kemira? It is a global company, but its customers are Finnish forest industry companies that manufacture tissue paper in Finland (as I understand it) = more tissues should be sold? Could this soften the damage caused by Corona elsewhere?
I am somehow under the impression that banks are rather the not-so-safe investment when there is a crisis or something similar going on. If shares fall significantly, banks’ performance-based fund fees will decrease → pressure on earnings. In addition, investors may panic and realize funds, which also immediately affects earnings. Furthermore, a recession or general market nervousness is easily poison for banks; it certainly doesn’t do any good. Nervousness can cool down private individuals’ and companies’ loan withdrawals or bond issues, investments are postponed, etc. In a severe recession, credit losses increase.
I would also say that no company is likely to directly profit from the coronavirus (unless someone invents a vaccine or something similar). Perhaps it is precisely that, indirectly, some company can benefit when a competitor’s business is disrupted because they can’t get parts from suppliers or otherwise the virus puts on the brakes a bit.
Agreed regarding the banks. My scenario is more for a situation where coronavirus is a short-lived problem. Or a situation where the economy is allowed to keep running, no matter what.
Of course, if bank stock prices were to plummet and an investor had a compelling need to own banks, this could potentially create a buying opportunity (I haven’t been following how banks have been performing lately). However, the fact that prices are plummeting and there’s volatility in the market doesn’t actually improve banks’ earnings performance; rather, it’s the opposite (based on the reasons above).
What are your thoughts on Sampo’s performance if the economy takes a bad dive? I can’t quite direct my thoughts… Sampo has extensive investment operations, which could lead to heavy losses, but what about in the longer term when the economy returns to growth and stock valuations rise again? A bit of a double-edged sword.
Aren’t these kinds of situations precisely advantageous for Sampo? They get to buy good companies cheaply. For example, if TopDanmark were to crash really badly now…
New car sales/manufacturing are stalling, so we’ll get a used car with 5,000 km from Kamux, and this is Kamux’s advantage as long as the coronavirus doesn’t cause any major exceptional circumstances in Finland. But if Finland ends up in the same situation as China (widespread quarantines), then Kamux will certainly take a big hit as well.
True! It certainly affects things if they have to announce that we need to prepare for possible delivery delays it might steer people towards looking at slightly used options.
I don’t think it would burden health insurance, etc. If it escalates into a pandemic → monitoring and treatment would primarily be on the public sector side, not so much private. People also avoid going to doctors for fear of infection, employers give sick leave without certificates, people take better care of hygiene and get sick less from common causes of visits.
Considering also the significantly reduced travel, it benefits travel insurance, etc. Car insurance probably also has potential for improvement, as commuting by car decreases due to remote work, etc. On the home insurance side, there might be some trouble, and of course, unfortunately in some cases, life insurance, etc.
All in all, probably an okay situation for Sampo, as they have money. Of course, the economic downturn is the biggest negative driver, and considering that interest rates won’t go up in these conditions - no defense can be expected from that front..
Don’t IF and Mandatum have significant weightings in stocks in addition to interest rates? Thus, the market turmoil is naturally reflected in their results as well. Sampo should have bought Topdanmark back in the day with a proper offer instead of licking its chops. A lot has to happen for Topdanmark to drop to Sampo’s desired level, as everyone knows that a takeover bid will come then.
What about Kesko and other companies involved in daily consumer goods? If we assume this won’t become a global pandemic and the disruption is at least seemingly short-term. Panic drives people to hoard food? Or perhaps, with an even finer filter, some domestic/global canned food manufacturer?
My scenario is more for a situation where coronavirus is a short-lived problem. Or a situation where the economy is allowed to keep running, no matter what.
it might steer people towards looking at slightly used options.