The Romanian American Chamber of Commerce (RACC) hosted its first Zoom meeting presented by Andre Capon, a member of the RACC and a frequent contributor to the Ziarul Bursa (www.bursa.ro), a leading Romanian financial and business daily. Mr. Capon is the President of the CBM Group, a top financial services firm based in New York, active since 1992 and has advised over 60 leading financial institutions around the world.
Mr. Capon covered topics of the evolution of the pandemic, how deep a recession/depression should we expect, how will governments and businesses finance the recovery, what will be the impact of the crisis on globalization, and the outlook for interest rates, FX, inflation, credit markets, real estate.
Photo: Courtesy of Mr. Andre Cappon
On the discussion of the market changes in the times of COVID-19, he Mr. Capon mentioned that debt from pension funds and social security is very likely and government debt will increase along with taxes. He also forecasted the government may interfere more with private businesses with regulations. A key issue Mr. Capon brought up is the long-term balance between freedom and privacy and increased surveillance/control of individuals’ lives in the name of "protection". This may involve medical passports and systematic contact tracing enforced by the government.
On the impact of the crisis on globalization, Mr. Capon believes there is less use of commercial real estate, thus secondary cities will do better. He also mentioned South Korea, Taiwan, Japan, Singapore, India, Mexico, Vietnam, Philippines, and Romania will have more investments as these countries have stable markets. The US-Europe relationship has also suffered from the crises, however it may be easily restored and “fixed” in view of traditional links as NATO may provide a framework.
The pandemic has a great effect on business models and everyday life. Supply chains for essential products such as pharmaceuticals, medical products will be re-engineered and, where possible “repatriated” in large diversified economies such as North America and Europe. Since labor costs in developed economies are high, there will be more automation and technology in manufacturing. Manufacturing supply chains will be re-engineered for resiliency. Most likely, much manufacturing will still be outsourced to economies with low labor costs, other than China such as Mexico and Vietnam, Eastern Europe, Turkey, Philippines, etc. Such countries will enjoy renewed growth and build a new infrastructure to service the supply chain to the developed world.
Telecommuting, telemedicine, working-at-home will become more common, especially in white collar services. We can expect new IT businesses to emerge to serve these new needs such as an increase in online education. Mr. Cappon also expects an emergence of new electronic infrastructure to support the new ways if working such as Zoom, e-commerce platforms to displace traditional retailing even faster than dating, new logistics and delivery solutions to support e-commerce, and a continued boom in fintech.
Overall, as the pandemic subsides, the economy and the capital markets will probably recover. The stock market has already recovered much of the decline in late March. The likely consequences may include an increased role for government- decrease in globalization and increased geopolitical tensions. In the long term, the pandemic and the ensuing crisis may be a warning. For the world is getting increasingly crowded and highly interconnected, the demographic change such as the aging of populations, risk of economic stagnation in the developed world and demographic pressures in the developing world is looming.
Photo: Courtesy of Mr. Andre Cappon
About Andre Cappon:
Andre Cappon is the President and Founding Partner of the CBM Group. He has over twenty-five years' experience as a consultant to financial services companies.
Prior to the founding of the CBM Group, he was a senior partner of Oliver, Wyman & Co., a Vice-President and shareholder of Booz, Allen and Hamilton, Inc., a manager with Andersen Consulting (now Accenture). He began his career as an analyst for the Organization for Economic Cooperation and Development (OECD).
Mr. Cappon graduated from the Massachusetts Institute of Technology (MIT), with a B.Sc. in Mathematics and from Columbia University, with an M.S. in Operations Research. He is fluent in English, French, Romanian, Portuguese and Spanish.
For more information on RACC: http://www.racc.ro/