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Global X - Charting Disruption 2Q 2020

The Blue Water Team

This report by Global X examines the changes occurring across a number of industries thanks to shifts in the way people are working, shopping, and playing during the COVID-19 pandemic.  While these changes began because of the global pandemic, they have the potential to have a long-lasting impact on affected industries. 

The most fundamental shift in how people work is the switch to remote work. This shift is reflected both in soaring online searches related to remote work between February and March of 2020 and soaring data consumption between January and March 2020 as employees spent more time working online. 

These changes primarily impact the world of cloud computing, as remote workers and their employers use the cloud to collaborate, communicate, and store shared data for easy anytime access. As remote work increased in March 2020, so did cyber attacks. The need to combat these attacks gave rise to an increased demand for solutions like VPNs and Remote Desktop Protocols. 

People do not just work during a pandemic. They also play, and in the face of restricted activities outside the home, many have chosen to take up video games and esports. Global X anticipates that these spikes (of about 400,000 Twitch users in a single month, for example), may be permanent, as increased numbers of people become accustomed to passing the time with this kind of entertainment. These industries should also benefit from the upcoming release of two new gaming consoles. 

Many people, about 66 percent of Internet users, also plan to use extra time during the pandemic on social media. Social media channels are responding to this trend, and to plateauing growth of new social media users, with targeted marketing designed to maximize the profits they make while users are on social media. 

E-commerce, at least certain industries within e-commerce, should thrive during the pandemic, as individuals take much of their shopping online. The online purchase of essential goods has shown the greatest growth. Between February 18, 2020, and March 29, 2020, the year-over-year growth of essential goods e-commerce revenue increased from almost 0 to almost 290 percent. 

In the face of the COVID-19 pandemic, other industries are also shifting. Cannabis legalization, for example, could benefit from local governments' need for tax revenue. The construction industry, and related industries, could benefit if local governments choose to improve infrastructure as a way to stimulate the economy during the pandemic-driven recession. And fintech may enjoy broader adoption across established and emerging markets after the pandemic subsides. 

Blue Water can build portfolios that incorporates these disruptive themes.