The Pandemiconomic Impact: Insights from ACCA finance professionals
How to adapt to avoid getting left behind? is the question of the hour amidst the COVID-19 pandemic which is more than anything else a humanitarian challenge. For companies, acting promptly is everything but means much more than just deploying digital tech—from e-commerce platforms to automating internal processes for greater efficiencies or holding online meetings—it also requires a fundamental shift in how corporate leaders approach business, says ACCA Member Rathnakala Kumaragurunathan.
“Technology will save us from this crisis, but it needs people with the right attitude; people prepared to take an adaptive, bottom-up approach to complement efforts from the top,” she says.
Kumaragurunathan is an Associate Director for Investment Research at Acuity Knowledge Partners. She also leads the Training and Knowledge Management function at Acuity’s Colombo delivery centre.
Acuity Knowledge Partners is a leading provider of high-value research, analytics and business intelligence to the financial services sector. The company supports over 200 financial institutions and consulting companies through a team of over 2000 subject matter experts who work as extensions to client research teams.
“Covid-19 is the most significant market-moving event since the global financial crisis. The economic fallout is as bad as the Great Depression in the 1930s with the IMF projecting global growth rates in 2020 to fall to negative 3%, making the downgrade revision since January 2020 the sharpest,” Kumaragurunathan says.
A combination of extended lockdowns and drastic containment measures will, unsurprisingly, affect global economic growth. In Asia-Pacific, GDP growth rates will be mute before any gradual recovery can be witnessed, perhaps during the first half of 2021. In emerging markets, however, the impact could be relatively more severe given the extended lockdowns and business activity nearly at a holt. Similarly, full-year GDP growth for the Eurozone is also going through a wave of sharper downward revisions for the remaining quarters of 2020.
The recovery from COVID-19 will be slow and painful. Economic forecasting is tricky. Government stimulus will help contain the economic fallout, but strong management is needed to avoid exacerbating macroeconomic risks.
World over, portfolio managers are shifting towards safer assets due to the cloud of unprecedented uncertainty cast by the COVID-19 pandemic over economies and markets everywhere. “However, funds are not exiting equities entirely. They are also picking high-value stocks which could give impressive returns during the recovery stage,” Kumaragurunathan says.
With large stimulus packages and added liquidity through quantitative easing programs, developed market equities have seen interest from investors.
“Fund managers who picked the right stocks during the 2008 financial crisis saw their equity portfolios return above-average figures over a 5-year period,” she says, underscoring the value of research and data-driven decision making.
This has implications for any business looking to do more than survive and get ahead of the curve during the COVID-19 crisis. “It boils down to striking a balance between technology, talent and risk management at all levels of business”.
To quickly reallocate portfolios to safer asset classes and markets during a crisis, global portfolio managers need reliable data, fast. Acuity Knowledge Partners’ ability to do just that has resulted in a spike in business volumes since the outbreak of COVID-19. Fortunately, Acuity Knowledge Partners has invested in AI to automate time-consuming, yet basic data gathering tasks in order to add higher value to their clients. The company transformed itself into a digital platform called BEAT (Business Excellence and Automation Tools), which includes artificial intelligence, natural language processing and workflow as critical components.
Amidst the many uncertainties, emerging economies like Sri Lanka are bracing for the new normal with e-commerce, online healthcare and digital payment platforms gaining traction with changing consumption habits. At a basic level, companies have discovered the benefits of hosting online conferences and meetings to keep employees engaged and motivated.
“Technology will be an important contributor to a business’s survival and success, but that alone will not be enough – reframing efforts and proactively creating clarity and security for employees is as important,” Kumaragurunathan says.
Success needs a fundamental change in attitude, across the board.
This is best demonstrated by ACCA and its mandate of building resilient finance professionals. Moving out of its traditional comfort zone, the global accounting body is at the forefront of developing finance professionals with skills to lead business transformations and take advantage of opportunities in a digital age. ACCA is pioneering research and thought leadership in how ‘high-tech’ areas such as AI and machine learning can impact businesses.
Kumaragurunathan insists that human intervention is necessary for technology to be effective.
“Business leaders must focus on rapidly innovating around new needs and be ready for a faster recovery than expected – this will develop a company’s ability to adapt to a situation, to pivot, to think creatively and connect with employees at a deeper level to enhance engagement and build resilience.”
“No doubt, decision making needs to be more data-driven than before, but speed and discipline are far more critical,” says, Kumaragurunatha