Lockdowns have opposing effects on big and small businesses: research

„Listed corporates reported highest ever profits of Rs.109.3 bn for March quarter „Big businesses bought over small biz that struggled to withstand pandemic pressures

While big corporates manage to acclimatise to the lockdown-styled restrictions, small businesses are increasingly being pushed to a corner and could even be pushed to go out of business, according to a report by a Colombo-based equity brokerage.

In a report to announce the highest ever profits recorded by the big corporates listed on the Colombo Stock Exchange for the quarter ended March 2021, Softlogic Stockbrokers said these companies had shown increasingly more adaptability and the ability to withstand the lockdown-styled restrictions.

Sri Lanka’s listed corporates reported a cumulative Rs.109.3 billion in earnings for the quarter ended March 2021, recording a mammoth 220 percent increase from the same quarter in 2020, delivering the best-ever quarterly earnings in the history.

“A deeper analysis of earnings reveals confirms the thesis that corporates are becoming better equipped to handle lockdowns, as it makes its transition into the new normal, whilst the opening up of the economy provides an instant boost following an extended lockdown period,” said Softlogic Stockbrokers.

While these companies may not be able to repeat the same performance in the subsequent quarter ending June 30, due to lockdowns, the observation by the researchers at Softlogic Stockbrokers reflects the growing divide between the prospects for big and small businesses as a result of the pandemic-induced lockdowns and related restrictions.

Pandemic response created a fertile ground for the big businesses to enhance their clout over the lives of the people, as they bought over small businesses, which were increasingly finding difficult to withstand the pressures, reducing the choice available for the consumer and thereby greatly reducing the competitiveness in the market place.

This also leads to massive long-term economic, social and political ramifications such as increasing concentration of incomes or expanding income inequality, growing dependence for jobs on big corporates run by a few oligarchs, who can then influence and manipulate the politics and governance for their advantage by reshaping the discourse.