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The opportunities that crises create

The opportunities that crises create"The number of these opportunities is limited only by people's imagination and determination."

 

There is an old Chinese saying that in every crisis, there are opportunities. The Spaniards have a saying that is similar: “No hay mal viento que fren no trae (There is no ill wind that does not bring some good.)”

The crisis that the world economy is currently experiencing is no exception to the rule expressed by the sayings. There are opportunities to be found in the worst downward movement to afflict the world economy since the Great Depression of the 1930s. The opportunities exist in the economic areas most severely affected by the phenomena occasioned by the locking down of national economies: asset values, transportation networks, distribution systems and production of good needed by the medical community. Taking advantage of the unfolding opportunities can be accomplished through acquisition of reduced-price assets, introduction of alternative products, improvements of distribution methods and ramped-up manufacture of products directly related to the effort to resolve the crisis.

During economic crises, the natural tendency of owners of assets – financial as well as non-financial – is to accept reduced valuations for them either because they need cash or because the markets for their assets are displaying signs of weakening.

A good example is the market for securities; the Philippine Stock Exchange index – the Phisix – has been under sustained downward pressure from the coronavirus pandemic, with the result that even the blue-chip stocks are now being priced at levels that have made them excellent buys. The Secretary of Finance did the right thing when he directed the management of the Government Service Insurance System and SSS Social Security System --owners of two of the largest securities portfolio in this country – to take advantage of the current weakness of the domestic equities market by picking up now-lower-priced stocks. Many other assets, such as jewelry and motor vehicles, likewise are now selling at prices considerably lower than their pre-COVID-19 valuations.

The lockdown having been accompanied – nay, having been made largely possible – by the cessation of transport operations, the transport industry is another good place to search for investment opportunities during the current crisis. The sharp rise in sales of bicycles – more than 50 percent, apparently – is a good example of investment opportunities in alternative means of urban transportation. However, would-be availers of such opportunities have to contend with two problems, one financial and the other administrative. The financial problem is the comparatively higher investment requirement and the administrative problem is the need to obtain the approvals of the concerned regulatory bodies, namely Land Transportation Franchising and Regulatory Board and Metro Manila Development Authority. Still, the investment opportunities are there.

The same can be said of the distribution industry, which is a major part of the logistics sector. Distribution enterprises have mushroomed to bridge the gap brought about by the rupture of supplier-consumer links caused by the lockdown. The delivery by various motorized means of purchases made online has been a godsend, for it has created alternative sources of income for dismissed workers and owners of closed-down businesses. Given consumption’s two-thirds share of the country’s gross domestic product, and the application-designing capability of tech-savvy entrepreneurs, investment opportunities in the distribution industry may be said to be abundant.

And, of course, investment opportunities abound in the sector of the Philippine economy most closely connected to the current crisis. There are possibilities aplenty in the production of medical hardware (respirators, ventilators, ICU equipment) and software (personal protective equipment, disinfectants, sanitizers, masks, gloves, etc.) essential to the fight against COVID-19. These items are needed in very large quantities. At the rate at which biological catastrophes have been occurring in recent decades – since 2003 there have been Ebola, SARS, MERS, and now COVID-19 – stockpiles of these items will have to be created and maintained.

These are only some of the investment opportunities created by the current crisis. There are other opportunities, whose number is limited only by the imagination and determination of entrepreneurs and people whose livelihoods have been damaged by the coronavirus pandemic.

Truly, there is no ill wind that blows no good.

Topics: economy , coronavirus disease , Great Depression , Land Transportation Franchising and Regulatory Board
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