There has been a volatile market in the past few weeks with the assumptions from investors that certain things might happen. What you are seeing in the market is not of the current situation but regarding the outcome or the expectations after a year or so that will happen because of the current decisions taken by the government to fight the crisis.
Macroeconomic views
As every government is has tried providing a good stimulus bill to their country to support the citizens residing there, there has been a tremendous bond purchase by the G-7 countries from their respective central banks nearing to $1.4 Trillion which is close to 5 times higher than 2008 financial crisis borrowings.
Even if we look at the Indian scenario the state government are raising funds through bonds and as yet the Reserve bank has not stepped in.
Looking at the current scenario of volatility of the markets we do not still know whether we have touched the bottom or not or have we passed that stage. Being an optimist I expect the markets to grow in a 'V' manner but a 'U' or else 'L' shaped curve is expected considering the position of the COVID-19. Even the experts who are racing to make the vaccines have asked for a time of 15-18 months to make proper vaccine. Still even if the vaccine is made the supply is questionable as well as the population which will be vaccinated will take tremendous amount of time and before that we will have to live in the new normal situation.
It is also likely that we have entered into recession starting from March when the economy started to tumble leaving many problems to MSMEs and corona virus giving it a boost as we see there has been an increment in the unemployment rate and is expected to be at 23% currently and is expected to be more.
The new normal
The new normal after the crisis situation will have social distancing at the most and increase in health measures till the vaccine is not found. The factories may start running but there is a lack of demand as many countries have gone for a lock down and may extend till there is a proper certainty from the healthcare officials. As the daily wage earners have also been migrating there would definitely a shortage of laborers and the companies wouldn't be sure of the production capacity they may achieve. There is probable threat to the companies in near term as after the lock down is lifted there will be a constant fear among-st the companies of another lock down in case the number of patients goes upwards at an increasing rate.
The strategic change
The companies will be changing their strategies globally and would be looking for local production capacity enhancement as well as multiple countries in order to never stop the business supply chain because of another crisis that might happen in future. Considering such changes the outflow of the cash would be very crucial as spending on non essential things would be stopped immediately and conserve cash for at least 6-7 months till the companies have enough buffer to spend on various things.
Marketing Mix
Marketing companies are likely to be affected because of the lack of demand and also as the companies would not be willing to spend much as the consumers would mostly interested for surviving the corona virus situation as the number of cases are expected to go much higher after the lock down. Thus marketing firms are likely to make a long term strategy and bring out out of the box business models in order to survive in the market. Looking at this situation another 2-3 months would be very crucial for the marketing firms
Labour Problems
Considering many of the companies would now be upgrading technology and would try to automate as much as possible to have less labour problems as it seems that now the labour problem is going to rise since many of the daily wage earners have migrated and bringing them back by giving them advance payments would largely affect the cash outflows. Even the labourers are scared to come to the companies which comes under the essential services in fear of corona virus. This will be there as labour shortage is always there in the market but the fear will only decline with vaccine.
Logistics
There has been volatility in the crude oil market but the current deal between the OPEC+ will certainly stable the oil prices.
This has mostly affected the logistics market as it seems that mostly logistics on railways would be more affected more as there are chances that the prices of roadways may go down with decrease in crude prices leading to a very tough competition and acquiring more consumers to roadways. But there is currently a shortage in supply chain in roadways and is not likely to be met in the crisis time, also as increasing the safety concerns some companies may make it compulsory to have 2 drivers and also if there is a single driver his health is taken care of.
Financials
The financial market is likely to evolve as there will be increase safety in the market as the issue which always remains 'Average Receivables' will still be a big problem. While there is a solution in the export market why haven't there been a similar agencies working upon the domestic market.
For eg: ECGC is there which identifies the limit of the consumer in the other country and also gives the exporters 95% coverage in case of defaults.
Then why haven't the banks joined together to give provide information on how much credit limit should be provided by the suppliers to their customers and also probable risk coverage upto certain percentage by charging regular premiums such as the insurance companies. There can be something as fixing the credit cycle even for those firms who are not Pvt. Ltd just to not enter into the hassles of running a company.
Green Business
The future, as India is moving to sustainable and renewable energy projects this is the certain future and investments in this would also be bringing results atleast 4 times that of the current market. Also we have infrastructure problem which primarily needs to be sorted out before transitioning into the future. As the government wants to have all the cars to be electric by 2035 it is definitely impossible without a sound infrastructure planning of bringing charging stations as well as using the renewable energy other than solar also to use. Since there are no new innovations happened at reducing the cost of using wind as well as water to be used for large masses, there seems likely a future of getting and developing a new business model into each of the area and developing one's own niche.
Currently I have mentioned about few things and would come up with new sectors in the next blog about the new normal that will likely happen post the virus period.
Macroeconomic views
As every government is has tried providing a good stimulus bill to their country to support the citizens residing there, there has been a tremendous bond purchase by the G-7 countries from their respective central banks nearing to $1.4 Trillion which is close to 5 times higher than 2008 financial crisis borrowings.
Looking at the current scenario of volatility of the markets we do not still know whether we have touched the bottom or not or have we passed that stage. Being an optimist I expect the markets to grow in a 'V' manner but a 'U' or else 'L' shaped curve is expected considering the position of the COVID-19. Even the experts who are racing to make the vaccines have asked for a time of 15-18 months to make proper vaccine. Still even if the vaccine is made the supply is questionable as well as the population which will be vaccinated will take tremendous amount of time and before that we will have to live in the new normal situation.
It is also likely that we have entered into recession starting from March when the economy started to tumble leaving many problems to MSMEs and corona virus giving it a boost as we see there has been an increment in the unemployment rate and is expected to be at 23% currently and is expected to be more.
The new normal
The new normal after the crisis situation will have social distancing at the most and increase in health measures till the vaccine is not found. The factories may start running but there is a lack of demand as many countries have gone for a lock down and may extend till there is a proper certainty from the healthcare officials. As the daily wage earners have also been migrating there would definitely a shortage of laborers and the companies wouldn't be sure of the production capacity they may achieve. There is probable threat to the companies in near term as after the lock down is lifted there will be a constant fear among-st the companies of another lock down in case the number of patients goes upwards at an increasing rate.
The strategic change
The companies will be changing their strategies globally and would be looking for local production capacity enhancement as well as multiple countries in order to never stop the business supply chain because of another crisis that might happen in future. Considering such changes the outflow of the cash would be very crucial as spending on non essential things would be stopped immediately and conserve cash for at least 6-7 months till the companies have enough buffer to spend on various things.
Marketing Mix
Marketing companies are likely to be affected because of the lack of demand and also as the companies would not be willing to spend much as the consumers would mostly interested for surviving the corona virus situation as the number of cases are expected to go much higher after the lock down. Thus marketing firms are likely to make a long term strategy and bring out out of the box business models in order to survive in the market. Looking at this situation another 2-3 months would be very crucial for the marketing firms
Labour Problems
Considering many of the companies would now be upgrading technology and would try to automate as much as possible to have less labour problems as it seems that now the labour problem is going to rise since many of the daily wage earners have migrated and bringing them back by giving them advance payments would largely affect the cash outflows. Even the labourers are scared to come to the companies which comes under the essential services in fear of corona virus. This will be there as labour shortage is always there in the market but the fear will only decline with vaccine.
Logistics
There has been volatility in the crude oil market but the current deal between the OPEC+ will certainly stable the oil prices.
This has mostly affected the logistics market as it seems that mostly logistics on railways would be more affected more as there are chances that the prices of roadways may go down with decrease in crude prices leading to a very tough competition and acquiring more consumers to roadways. But there is currently a shortage in supply chain in roadways and is not likely to be met in the crisis time, also as increasing the safety concerns some companies may make it compulsory to have 2 drivers and also if there is a single driver his health is taken care of.
Financials
The financial market is likely to evolve as there will be increase safety in the market as the issue which always remains 'Average Receivables' will still be a big problem. While there is a solution in the export market why haven't there been a similar agencies working upon the domestic market.
For eg: ECGC is there which identifies the limit of the consumer in the other country and also gives the exporters 95% coverage in case of defaults.
Then why haven't the banks joined together to give provide information on how much credit limit should be provided by the suppliers to their customers and also probable risk coverage upto certain percentage by charging regular premiums such as the insurance companies. There can be something as fixing the credit cycle even for those firms who are not Pvt. Ltd just to not enter into the hassles of running a company.
Green Business
The future, as India is moving to sustainable and renewable energy projects this is the certain future and investments in this would also be bringing results atleast 4 times that of the current market. Also we have infrastructure problem which primarily needs to be sorted out before transitioning into the future. As the government wants to have all the cars to be electric by 2035 it is definitely impossible without a sound infrastructure planning of bringing charging stations as well as using the renewable energy other than solar also to use. Since there are no new innovations happened at reducing the cost of using wind as well as water to be used for large masses, there seems likely a future of getting and developing a new business model into each of the area and developing one's own niche.
Currently I have mentioned about few things and would come up with new sectors in the next blog about the new normal that will likely happen post the virus period.
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