Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Online services leading growth economy

Unknown and unnamed a few months ago, Covid-19 has since upended much of the world economy and dictated a new set of norms for everyday life. People have had to adapt to the realities of working and studying from home, while social distancing rules have brought a major shift in consumer behaviour, spending patterns and general outlook.
The result is that online services have come of age. Necessity, combined with technology and convenience, has been the driver. And though some resetting is likely as the pandemic winds down, it is clear a new ecosystem is taking shape and, overall, there is no turning back.

“In terms of changes, this is very significant,” says Edmond Huang, managing director, head of Hong Kong/China research and head of China equity strategy at leading investment bank Credit Suisse. “Online services are growing fast. It’s not only e-commerce and delivery; online education and entertainment are also much more important than before. The virus outbreak has been a wake-up call for many businesses and investors. But the corporate world should be confident about developments and ready to throw more resources into this area.”

At one level, Huang notes, investment is needed in data centres, AI and 5G networks to improve connectivity and provide the infrastructure to support growth. At another, executives should be finding ways to give traditional offline businesses an online presence to avoid missing out on the opportunities available.

“All of a sudden, people in sectors which have taken a hit from this trend can see it’s a question of survival, not just a matter of cash flow,” Huang says. “Everything will not just be ‘back to normal’ when the virus is over. The wider impact is huge.”

As an example, he notes that online sportswear sales are now recovering, but offline they continue to struggle. That is a clear enough sign: businesses must adjust to meet changing consumer demand. And investors should be alert to the knock-on effects – positive or negative – in related sectors and the broader economy.

For instance, there are easily foreseeable consequences for retail facilities, rental rates and renewals. The switch to online meetings and more working from home is sure to affect the office sector, with implications too for the wider property market. And, as users lean more towards online delivery of education, entertainment, health care and medical services, there will be a further shift in needs for advanced IT infrastructure, apps, capital, and specialist employees with relevant skills.

With any luck, that will spur all kinds of innovation, start-ups and a surge in economic growth. However, such a scenario also raises a number of questions, not least about data privacy, effective regulation, tax liabilities, and the risks of control and influence being exercised by just a few dominant players.

“In a capitalist system, big companies want to get bigger and more powerful,” says Huang, who doubles as head of China equity strategy for Credit Suisse. “And people now want to invest in the market leaders in e-commerce because they deliver strong results. But when such companies grow to a certain scale, it becomes a global issue. Society will raise questions on what these companies give back and look at how to find a balance.”

Huang does not claim to have all the answers. But with online services and the internet economy set for further rapid expansion, he wouldn’t be surprised to see tighter regulation and antitrust initiatives. The best-known names may talk about the interests of stakeholders and bringing benefits to all. However, more stakeholders need to be consulted in order to facilitate such a concerted move.

“We will see more regulation and, hopefully, more balance between growth and responsibility towards society,” he says. “You cannot stop the overall trend, but Europe, for instance, will argue that big companies have to pay more tax and that some people are not exactly benefiting. You need to share the growth more fairly.”

In general, though, such issues are unlikely to deter local investors. Instead, judging by recent events, they will be lining up to back “new economy” listings and looking to cash in on any float helped by current stimulus plans or excess liquidity.

“From the regulatory point of view, Hong Kong and Shanghai are very much ready to welcome these companies for listing, hoping this will trigger a virtuous circle,” Huang says. “The weighting of the Hang Seng Index is still too much towards old economy stocks. You will see a move to the growth economy of e-commerce, online education and biotech. It is the same for the Shanghai index which has pretty much been banks, commodities and industrials. In the next five to 10 years, the trend will be from physical to online. People in Hong Kong were ready to invest in physical assets and earn 5 per cent a year, but they now see the game changers.”
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
France, at an Impasse, Heads Toward Another Government Collapse
The Country That Got Too Rich? Public Spending Dominates Norway Election
EU Proposes Phasing Out Russian Oil and Gas by End of 2027 to End Energy Dependence
More Than 150,000 Followers for a Fictional Character: The New Influencers Are AI Creations
EU Prepares for War
Trump Threatens Retaliatory Tariffs After EU Imposes €2.95 Billion Fine on Google
Tesla Board Proposes Unprecedented One-Trillion-Dollar Performance Package for Elon Musk
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Trump Administration Advances Plans to Rebrand Pentagon as Department of War Instead of the Fake Term Department of Defense
Big Tech Executives Laud Trump at White House Dinner, Unveil Massive U.S. Investments
Tether Expands into Gold Sector with Profit-Driven Diversification
‘Looks Like a Wig’: Online Users Express Concern Over Kate Middleton
Florida’s Vaccine Revolution: DeSantis Declares War on Mandates
Trump’s New War – and the ‘Drug Tyrant’ Fearing Invasion: ‘1,200 Missiles Aimed at Us’
"The Situation Has Never Been This Bad": The Fall of PepsiCo
At the Parade in China: Laser Weapons, 'Eagle Strike,' and a Missile Capable of 'Striking Anywhere in the World'
The Fashion Designer Who Became an Italian Symbol: Giorgio Armani Has Died at 91
Putin Celebrates ‘Unprecedentedly High’ Ties with China as Gazprom Seals Power of Siberia-2 Deal
China Unveils New Weapons in Grand Military Parade as Xi Hosts Putin and Kim
Rapper Cardi B Cleared of Liability in Los Angeles Civil Assault Trial
Google Avoids Break-Up in U.S. Antitrust Case as Stocks Rise
Couple celebrates 80th wedding anniversary at assisted living facility in Lancaster
Information Warfare in the Age of AI: How Language Models Become Targets and Tools
The White House on LinkedIn Has Changed Their Profile Picture to Donald Trump
"Insulted the Prophet Muhammad": Woman Burned Alive by Angry Mob in Niger State, Nigeria
Trump Responds to Death Rumors – Announces 'Missile City'
Druzhba Pipeline Incident Sparks Geopolitical Tensions
Cost of Opposition Leader Péter Magyar's Economic Plan Revealed
Germany in Turmoil: Ukrainian Teenage Girl Pushed to Death by Illegal Iraqi Migrant
United Krack down on human rights: Graham Linehan Arrested at Heathrow Over Three X Posts, Hospitalised, Released on Bail with Posting Ban
Asian and Middle Eastern Investors Avoid US Markets
Ray Dalio Warns of US Shift to Autocracy
Eurozone Inflation Rises to 2.1% in August
Russia and China Sign New Gas Pipeline Deal
Von der Leyen's Plane Hit by Suspected Russian GPS Interference in an Incident Believed to Be Caused by Russia or by Pro-Peace or by Anti-Corruption European Activists
China's Robotics Industry Fuels Export Surge
Suntory Chairman Resigns After Police Probe
Gold Price Hits New All-Time Record
UK Fintechs Explore Buying US Banks
Greece Suspends 5% of Schools as Birth Rate Drops
Apollo to Launch $5 Billion Sports Investment Vehicle
Bolsonaro Trial Nears Close Amid US-Brazil Tension
European Banks Push for Lower Cross-Border Barriers
Poland's Offshore Wind Sector Attracts Investors
Budapest Central European Fashion Week Kicks Off
U.S. Celebrates Labor Day
Hungarian National Team Captain Scores Epic Goal
×