Covid-19 business disruption expected to end in 10 months

Business activity across most sectors and regions is expected to return to a stable level within a year and grow to pre-Covid levels by the end of 2021, according to a survey of Fidelity International’s in-house analysts. This month’s survey shows growing optimism over the path of the Covid-19 outbreak, with business disruption estimated to come to an end within 10 months, according to the global average of responses.  Fiona O’Neill, director, global research, Fidelity International, said: “Against tough economic data, green shoots are starting to emerge. China is leading the recovery, with our analysts expecting a wait of just under 6 months to reach stability, a sign the country’s economic momentum is gathering pace.  “The general upbeat picture is confirmed by a noticeable jump in the proportion of Fidelity analysts seeing positive leading indicators in their sectors.” O’Neill highlighted that the energy sector has seen the greatest improvement in fortunes, led by the stabilising price of oil, with 73% of analysts responding that leading indicators are positive, up from just 8% two months ago. Nearly 60% of the firm’s analysts see positive leading indicators in healthcare, while just under a half see an improvement in the IT and material sectors, as well as consumer discretionary. Across the board, there was significant improvement in sentiment across sectors when compared with April this year.  When business activity does stabilise, and the Covid-19 crisis passes, it will do so at levels below those seen in 2019, according to the study. The global average of Fidelity analyst responses shows that activity will be 2.9% lower than pre-Covid levels, while activity in China is expected to be 2% lower, and Europe will be 4.4% lower. O’Neill added: “The road to recovery will not be smooth, with sectors and regions recovering at different speeds. However by the end of 2021, all sectors are expected to be at or above pre-Covid levels, with IT and healthcare sectors more than 10% higher, double the global average of around 5%.” © 2020 funds global asia

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