How COVID-19 Impacted Japan and What Investment Opportunities it Created
Over the last two days, many new social problems have risen in Japan, alarms research by Mitsubishi Research Institute. The pandemic and the economic slowdown have affected six critical areas of peoples’ lives – wellness, water and food, energy and environment, mobility, disaster prevention, and human resource development.
During the pandemic, Japan saw a decrease in general health as many people stayed at home, suffering from chronic stress. At the same time, medical resources were made a lot more accessible as online medicine became widely available.
While the West seems to have coped with the pandemic thanks to mass vaccination programs, China, Japan, and the rest of south-east Asia keep on struggling with lockdowns.
This situation creates an interesting opportunity for investing. Online medicine should take over and stay for long. Remote could become one of the main ways of treatment. It’s fast, and it’s not bound limited.
Just like in every country, Japan’s tourism industry suffered a sharp decline. Restaurants were empty and looking for new distribution channels, such as direct home food delivery. Investing in food delivery seems a good option for a few in the coming years as people tend to get used to the good stuff. We can connect this with the still growing home working trend.
Homeworking gets us to another problem faced by Japan. Energy efficiency got a lot worse. People working from home generate a lot more power consumption. What society can do and what can become a good way to invest money in Japan is a change to distributed energy sources.
With the current crisis with coal fuels and the Ukrainian war, wind energy, and solar energy make this option even more considerable. Further into that, more countries desire to become carbon neutral so is Japan, and it looks like there is much to be done.
CO2 emissions of countries pledging carbon neutrality by 2050, Source: mri.co.jp
Human mobility slowed down as governments took pandemic prevention measures seriously. It finished with the fast rise of e-commerce and teleworking. So as one could expect from new technologies, internet companies will benefit and may be considered a good investment. The need for bandwidth should be accelerating. The reaction time also rises when more financial companies move to remote or hybrid teams.
The same challenge and opportunity arrived with the rise of remote learning. There were problems with IT knowledge among children, and education has always been a good investment. Even when it does not give you money, it smiles at kids, so it’s always worth it.
Japan: International Internet bandwidth per Internet user, kb/s, 2012 – 2016. Source: theglobaleconomy.com
Another investment strategy is looking for companies that propose services that can be used during normal times and in times of disasters. Think about sectors involved in backup power or communication sources, like satellite internet provider Starlink. The company has already been shown to be useful in times of war so that it can be as helpful during earthquakes or other disasters. This thinking would also suggest investing in space exploring companies and software houses.
| Six Areas | New Issues During Pandemic | Issues with Progress in Solutions During Pandemic |
| Wellness | Frailty risk increased as exercise and movement decreased under quarantine | Medical resources became more accessible as online medical examinations became widely available |
| Water/food | The primary industry was greatly damaged as tourism and the restaurant industry became sluggish | A new forms of consumption (e.g. consumers directly purchasing food from producers facing decreased demand |
| Energy/environment | Energy efficiency worsened as telework has become widespread, increasing power consumption at home | Accelerated shift to distributed energy |
| Mobility | Mobility was restricted to prevent the spread of infection; real experience and satisfaction were sought after | Increased convenience for consumers as needs could be satisfied at home via spread of telework and e-commerce |
| Disaster prevention/infrastructure | Prevention of infection or its early detection became an issue in preparation for the next pandemic | Widespread acceptance of the concept of services that can be used both in ordinary times and disasters |
| Education/human resource development | Disparity in IT at schools or in homes is directly reflected in educational disparity | Increased development of online services as tablet terminals were distributed to schools and the communication network was improved |
Source: Mitsubishi Research Institute, Japan External Trade Organization
The whole world suffered hard from the COVID-19 pandemic. So did trade markets. But even if this article is about investing in Japan we will use a word that originates from China. 危机 wēijī Chinese “crisis” consists of two signs – one meaning danger, and the second being a part of word opportunity or a change point in time. So we all should consider the current time as an option to make the world a better place as Japan tries. Or simply make more money during these uncertain times we live in.
And about danger? Yes, investment is always a danger that the technology we create won’t be enough or needed in five years. Or the money we try to invest now will lose its worth. It’s all true but That’s just how the world is from the beginning. Only those who make a move and go dangerous ways make mistakes.
So think this through – do you want to stay still and miss a potential opportunity or will you take the risk and make the change?
