Investors should know 'some experiences can't be digitized'

Experts cast eyes on the industries that could thrive once vaccines are widely distributed

Investors should know 'some experiences can't be digitized'

The brightest minds in the wealth management industry are already six months ahead as many ponder a vaccine-bolstered economy. One equity investment analyst believes there will be pent-up demand and urged investors to remember that “some experiences can’t be digitized”.

Todd Saligman, of Capital Group, told WP that, with domestic air travel soaring back in China, the question is: will the U.S. follow?

According to reports, on October 10, 2020, after months at home, 150 restless passengers boarded Qantas flight QF787 for a seven-hour flight from Sydney, Australia to ... Sydney, Australia. The flight sold out in 10 minutes, suggesting that the demand for air travel and even cruises will bounce back.

“The question is how quickly,” said Saligman, who covers U.S. and European airlines and U.S. cruise lines. “I believe it will happen quickly once we get a vaccine. We also saw this after the September 11 attacks. A lot of people thought consumers would never fly again, and traffic recovered relatively quickly.”

In China, he explained that, with the virus largely under control, the economy has rebounded and domestic air travel has nearly returned to pre-COVID levels. Meanwhile, cruising has resumed in Europe, and the U.S. has lifted its “no sail” order, provided ships meet strict health standards.

Saligman added: “This industry has got so much negative media, yet people are still booking cruises for next year at prices higher than they were in 2019. That’s pretty indicative of the pent-up demand for leisure travel.”

While some of the joys in life are relatively free of electronics, that won’t stop the digital leaders across all industries leaping ahead of their competition – and staying there. Those with rapid and efficient online models have emerged from the pack in style, from retail and entertainment to advertising, payment processing and even the fitness industry.

Chris Buchbinder, Capital Group portfolio manager, said: “We were already headed in this direction when COVID came along and gave it a huge shove forward. The growth rates at companies with a digital advantage have been phenomenal during the downturn and, in my view, we’re not going back.

“When the pandemic is over, we may see slower growth rates, but I don’t think a lot of people will be cancelling their Netflix subscriptions or returning their Peloton bikes.”