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This month’s survey of 146 Fidelity International analysts reveals the profound impact the coronavirus crisis will have on companies’ approach to social issues. Over half the responses indicate that companies will step up their focus on workers, consumers and the wider community as a direct result of the pandemic.



The health of staff has been at the forefront of company managements’ minds, and analysts from just about every region and sector confirm that companies will devote more attention to employees’ safety and wellbeing in the future. But the changes will be deeper and broader than that.

Our analysts report that European telecoms companies have been offering free data or devices to people in vulnerable demographic groups and have been offering support to governments and hospitals. A North America IT analyst reports that companies in her sector are working with governments to ensure healthcare providers are first in line for technical equipment. European consumer staples firms are increasing their involvement in public hygiene initiatives, while some materials firms are taking the opportunity to enhance links with local governments.

Healthcare and pharmaceutical companies are acutely aware of their central research and development role in the global pandemic. Many are keen to avoid the perception of profiteering, and, at least temporarily, this may undermine the bottom line. 

A North America pharmaceuticals industry analyst writes: “Many of my companies are now developing vaccines, and with plans to distribute the vaccines (at least initially) at cost [price]. This could obviously be a large positive for ESG perception for the sector, and may divide the more ethical players versus those trying to profit from the situation.”

Listen to the Pulse Survey podcast (above) for the full discussion.

One consistent message across many sectors and regions is a new focus on employees. This takes the form of improved safety, partly in response to the pandemic, but also a longer-term effort to improve employee satisfaction with better conditions and, in some cases, higher pay. 

The survey responses demonstrate that the global virus pandemic will accelerate a wider move towards stakeholder capitalism. As one energy analyst put it, “larger companies are prioritising society and employees over shareholders.” A consumer discretionary analyst covering Europe adds: “The crisis has highlighted that demonstrating good corporate citizenship and support for the communities in which the sector operates is now an essential part of building and sustaining brand equity.”  How persistent the post-virus changes prove to be, and whether additional costs will depress margins, will emerge in the months to come.

Situation still very challenging

Other parts of the survey reveal that the current environment is still very challenging for companies. Cuts to earnings forecasts are about as large as those expected last month, whether the disruption abates from here or continues for the rest of the year. Our analysts also forecast more pain for employees - workforces are set to shrink by a further 7 per cent in the next six months.


Meanwhile, the proportion of analysts who expect the decline in demand to be permanent, rather than temporary, has edged up from 39 per cent to 45 per cent globally. Europe may suffer the most, with 62 per cent of respondents expecting demand destruction. In materials, that proportion increased from 44 per cent in April to 56 per cent this month. One European materials analyst says: “Issues are shifting from a supply shock (mines shutting) to a demand shock (mines reopening but downstream demand much lower).”


Winners and losers beginning to emerge


However, underneath the averages, dispersion is rising both among and within sectors. While expected earnings cuts are little changed from last month overall, variation is starting to emerge between sectors and regions as the extent of the downturn becomes clearer. Consumer discretionary and industrials analysts are more optimistic than last month, while financials analysts are less so. And behind the average drop in workforce size, lies a very wide range between those analysts expecting a 50 per cent reduction to those expecting a 30 per cent increase.

The proportion of analysts expecting the pandemic will have a negative impact on earnings has fallen to 85 per cent from a peak of 91 per cent last month, indicating that negative sentiment is at least stabilising and has perhaps already peaked. A consumer discretionary analyst reports that his discussions with companies have moved on from the level of cash burn during shutdown to understanding the trajectory of recovery when things re-open.

The rising optimism among consumer discretionary analysts is particularly interesting because the sector has been hit hard by lockdowns enacted to curb the virus’s spread. As these measures are gradually relaxed, many companies within the sector are beginning to understand a potential road to recovery and guidance from company managements reflects this.

A China consumer discretionary sector analyst notes: “The situation reached the bottom in April, and as Mainland China is gradually relaxing the quarantine rules, the demand situation is expected to improve from mid-May.” “Sentiment has improved on the sector, stores are beginning to open in certain states and aggregate spending seems to have bounced off the bottom with stimulus,” adds a North America consumer discretionary analyst.

However, even within the sector, there is considerable variation. A Europe fixed income analyst covering hotels and restaurants reports: “In the past month it has become clearer that returning to normal in this sector will not be a 2021 event but more likely 2023 or beyond. Near-term full shut-downs have also been extended, so the worst part of the crisis is becoming worse.”

The theme of winners and losers beginning to emerge echoes throughout the survey responses. Those firms with an existing online capability have done and will continue to do better than those without. To be online is to be in demand and the information technology and telecoms sectors are benefitting from the lack of human movement. This is a trend that may outlive the Covid-19 crisis, as one Europe equity IT services analyst reports: “Longer term, I think it drives IT adoption.”

Not quite the turn

More analysts report that leading indicators in their sectors are positive this month compared to last month, a sign that while conditions might be harsh, at least some optimism is slowly building. It might be too early to call this the turn, but analysts are reporting that companies are beginning to set their sights on a strategy for recovery. China is still ahead in this respect, but other regions are starting to show signs of life too. 


The survey was conducted between 6-11 May and featured 205 responses from 145 analysts around the globe (analysts who cover more than one sector or region take the survey more than once).

Martin Dropkin

Martin Dropkin

Head of Asian Fixed Income

Fiona O'Neill

Fiona O'Neill

George Watson

George Watson

Investment Writer