Companies embracing digitalisation will stay robust in long run

KUALA LUMPUR: Enterprises that were impacted by Covid-19 profoundly but have transformed themselves into digital will be able to stay robust in the long run provided that they continue to provide re-training and reskilling processes to adapt to the new normal, a global investment firm said.

Franklin Equity Group vicepresident, research analyst and portfolio manager Jonathan Curtis said until a vaccine is found for the infection, consumers would eventually use online services aggressively as they felt that online experiences were better, more productive and easier.

“Clearly, Covid-19 is accelerating the digital transformation in companies.

Since the first infection was discovered in China in mid November through June 12, 2020, the S&P 500 Technology Index, was the best performing sector, up by 14 per cent,” he said in a virtual interview conducted by Franklin Templeton on Covid19’s impact on the technology sector.

Curtis said this showed that investors were getting to understand the great opportunity in the technology sector, as well as good growth and high-quality businesses in the sector as digital opportunity accelerates.

He said online business has not only lowered the cost for consumers and employees but also helps technology companies to accelerate their opportunity in digital.

He said currently, the tech spending environment has accelerated consumer needs, mainly in the entertainment such as YouTube and Spotify, telecommunications services, as well as a resurgence in demand for hardware supporting massive surge in ‘Work from Home’.

“Post crisis, we think most of the changes will remain and drive ‘innovators’ more deeply into digital transformation and awaken the ‘digital laggards’ to the needs to digitally transform,” he said.

Meanwhile, he said following the resurfacing of geopolitical tensions between the United States and China in the technology sector, the manufacturing of IT hardware has seen a gradual shift to Vietnam and India from China, while some have returned back to the United States.

However, he said China still remains strong in the semiconductor manufacturing segment as it has some of the advanced production in scale.

“On another note, we also believe China will have the largest 5G subscribers, given that they have the largest number of people to drive the 5G infrastructure investment and type of spectrum that are being used.

“This is going to be an important wireless connection, allowing better Internet of Things (IoT) and interesting edge computing capabilities, amongst others,” he added.