Human history has experienced several epidemics and pandemics. Most often such situations leads to stymied economic activities affecting most of the businesses and firms. This pandemic is seeing sectors like retail, restaurants, hospitality , tourism, automobile sector struggling while pharmaceuticals, E commerce and tech giants are flourishing. Several big and established companies have prospered despite tough conditions. Top companies on the list were Amazon, Microsoft, Apple, Tesla Tencent ,Facebook, Alphabet, PayPal, T-Mobile and Reliance industries. Thus the question still remains the same; why these large-cap corporations maintain dominant positions while on the other hand, the small and medium enterprises struggles to stay afloat?
Several major reasons include favorable government policies, expenditure on research and development, technology, bouncing back of stock markets, diversification etc. The pandemic is working in favor of major digital and tech players. Big resourceful organization's are the first to adhere to growing tech demands like shifting to contactless payment services or moving employees to work from home. In India, Mukesh Ambani's net worth rose to $79.3 billion as on August 10, making him the world’s fourth-richest person. His wealth rose by $22 billion this year. In six months of pandemic, there have been irrevocable changes made to our economy, job market and wealth inequality. Hence the coronavirus outbreak has created many winners and losers.
As we see the unemployment increasing day by day we can also notice alongside that the rich are getting richer in every unit of dollar going into their pockets. Forbes released their recent data of 400 richest Americans, and it is clear that not everyone is richer than they were a year ago. Entertainment, Energy and Leisure industries have been most severely impacted by this pandemic situation. The billionaire whose wealth contracted the most is Harold Hamm, the founder of Continental Resources as his fortune fell by almost 42%.
While people saw a surge in the cases of Corona in US, they also observed the sharp bounce back of the stock market , primarily driven by the action from US Federal Reserve as the Fed kept reducing their interest rates to zero because a huge population of US filed cases for not getting unemployment benefits in this crucial time.
Adding to that, social media based companies including Zoom, Facebook, Snapchat etc. saw a sudden spike due to their rising usage during the lockdown. Plus, the demand for necessities rose which lead to bringing profits for brands like Amazon, Walmart, Pharmaceutical companies etc.Talking about how the stock market affected the growth of billionaires, here's the image of the scenario.
The bouncing back of stock market led to a sharp increase in the wealth of major billionaires including Microsoft and Amazon. Amazon’s market capitalization has gained $570 billion so far in 2020. At the beginning of the year, the e-commerce company sported a valuation of around $920 billion. After the stock bounced back from the coronavirus market sell-off in March, the company is now worth $1.49 trillion. That makes Amazon one of the largest companies in the world, 63.3%. Amazon’s stock has increased by more than 60% this year. Apple shares have also skyrocketed 57% in 2020. The five largest companies in the S&P 500 in the month of September were Google's parent company Alphabet inc, Amazon, Apple, Microsoft Corporation and Facebook Inc. that recently made up about 23% of the index, the highest concentration in at least 30 years according to Goldman Sachs analysts. The S&P 500 is driven by capital investment which has been supported by technology spending during the pandemic. The other reason is that the investors view the market as forward looking, anticipating how the US economy and corporate earnings will perform in the next 6 to 12 months optimism has grown on hope for vaccine and further stimulus.
Coming to an end, the COVID-19 pandemic has pushed the world economy into a tailspin, with 2020 projected to be worse than any of the years since the global financial crisis. But billionaires, at least a select group across countries, have seen their wealth soar during the past three months, at the same time, more than 40 million Americans filed for unemployment.
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