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5 Trends That Could Define Our Post-Coronavirus Lives

The pandemic could leave a legacy of innovation, social change and geopolitical disruption, says this BofA Global Research report

AMID THE PANDEMIC, IT’S NATURAL TO WONDER when life will go back to normal. Yet that question, however understandable, may be misplaced. “The coronavirus is not just a temporary crisis; it’s a permanent disruptor,” says Haim Israel, Head of Thematic Investing at BofA Global Research. “It’s one of those rare events in history that will completely reshape geopolitics, societies and markets.”

In “The World After Covid,” a new report from BofA Global Research, Israel details five megatrends affecting everything from geopolitics to healthcare to technology. In some cases, the virus has sped up trends that were already underway, but might have taken five years or more to unfold without the pandemic, Israel notes. And despite the health and economic devastation, many of these changes will be positive, he believes.

“The coronavirus is not just a temporary crisis; it’s a permanent disruptor”—Haim Israel, Head of Thematic Investing at BofA Global Research

Ground-breaking technology research and development will be coronavirus’s legacy of innovation, says Israel. Government priorities, for instance, could shift towards better health systems and a greater resolve to head off the looming crisis of climate change.

Here are the five trends Israel believes will shape our lives—and create potential investment opportunities—going forward.

1. Geopolitics and Globalization
Expect rising tensions between the U.S. and China. Tectonic shifts in supply chains, from globalization and toward localization, were already well underway before the coronavirus. The pandemic will likely result in “a much faster-than-expected shift in manufacturing away from China,” Israel says, with the goal of reducing dependence on China in critical areas such as technology and pharmaceuticals. A greater focus on sustainability and social and environmental issues is also helping drive the trend away from globalization.

2. Tech Wars
The battle for technological supremacy between the U.S. and China will likely intensify in a new world accustomed to online entertainment and shopping, and one where the need for tracking data to avert future health crises is greater than ever. “The lasting legacy of this will be a combination of new communication infrastructure, data generation, cloud computing power and bandwidth,” Israel believes.

3. Big Government
The coronavirus has handed governments a newly expanded social mandate to protect their citizens. Expect greater government surveillance aimed at stemming future outbreaks and new debates over the greater social good versus individual privacy. Governments might also influence businesses focused primarily on shareholder returns to improve worker benefits and serve the needs of other stakeholders—including a greater emphasis on solving climate change and other environmental challenges.

4. A Greater Focus on Health
The coronavirus will amplify the importance of healthcare and the critical role it plays in national security and economic growth, Israel says. He believes the debate around universal healthcare is likely to intensify in the U.S. Globally, the push will be on for “a more efficient system that focuses on value-based outcomes, preventive care and greater use of technology,” he says.

5. The New Consumer
Gen Z is uniquely prepared for a new era of social distancing. As the first generation of digital natives, these younger consumers are comfortable in a world that takes place largely online. Other generations have adopted their digital ways during the lockdown. Many of these new habits are likely to stick, which has implications for business strategies going forward. On the other hand, younger consumers are at the greatest risk of reduced earnings in the wake of the crisis, he adds.

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Information is as of 05/22/2020

Opinions are those of the author(s), as of the date of this document and are subject to change.

Investing involves risk, including the possible loss of principal. Past performance is no guarantee of future results.

This material does not take into account a client’s particular investment objectives, financial situations or needs and is not intended as a recommendation, offer or solicitation for the purchase or sale of any security or investment strategy. Merrill offers a broad range of brokerage, investment advisory and other services. There are important differences between brokerage and investment advisory services, including the type of advice and assistance provided, the fees charged, and the rights and obligations of the parties. It is important to understand the differences, particularly when determining which service or services to select. For more information about these services and their differences, speak with your Merrill Lynch Wealth Management Advisor.

BofA Global Research is research produced by BofA Securities, Inc. (“BofAS”) and/or one or more of its affiliates. BofAS is a registered broker-dealer, Member SIPC, and wholly owned subsidiary of Bank of America Corporation.

Investments in a certain industry or sector may pose additional risk due to lack of diversification and sector concentration.

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