A viable business
The corona crisis has proved to be a tough test for companies, says Simon Christensen, chief portfolio manager at Danske Bank. At the start of the crisis, Simon and Danske Bank’s investment teams focused on stress-testing companies to assess whether they had a resilient business model and could get through the crisis.
“We found it important to focus our dialogue on those companies that were hit the hardest by the crisis in both short and long term and where there was greatest uncertainty on the viability of the business. Another important aspect was to analyse and discuss the potential behavioural changes prompted by the crisis, including a shift in demand for e-commerce, payment services or IT solutions that could significantly impact the growth potential of many companies,” explains Simon Christensen.
He points to the US company VISA, which has the world’s largest payments network. VISA’s business has been negatively affected by the reduction in travel activity caused by the crisis. However, while it is uncertain when and to what extent this area of the business will grow again, VISA has grown stronger as a result of the crisis. Greatly increased online shopping, in particular, has helped offset the fall in revenues, and this trend has also further speeded up the conversion from cash to card payments. In addition, many shops have encouraged customers to use payment cards rather than cash, as they are more hygienic.
Companies expected to be socially responsible
How a company acts during the crisis will very much define how consumers and society in general view the company, and this has a significant impact on the company’s business opportunities – after the crisis too. That is the assessment of Martin Slipsager Frandsen, senior portfolio manager at Danske Bank. He explains that this is why Danske Bank’s investment teams have focused on the degree of social responsibility companies have exhibited and how they have, for example, addressed and ensured employee health and safety, and contributed to stopping the spread of the virus and protecting the business.