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In the last six months, the global health crisis has turned practically the entire world on its head, but Europe has managed to fare better than most regions thanks to its early intervention measures.
Now, as Europe begins picking up the pieces and plans the road ahead, it is becoming clear which industries have been hit hard, and which have come out relatively unscathed.
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Fintech was built for this
The booming financial technology industry is widely predicted to grow at a staggering pace over the coming years, with most current estimates placing its growth at a CAGR of between 20 to 30 percent between 2020 and 2025. And it appears the economic crisis will hardly dent these projections.
According to recent research published by deVere Group, one of the world’s largest financial advisory firms, fintech apps in Europe saw usage jump by 72 percent in the early days of the crisis, as millions of people looked to manage their money from home.
NAGA, a German fintech company that operates a popular social trading platform, has recently made headlines for turning remarkable profits since the start of the crisis. After two rough years in 2018 and 2019, the startup reported drastically increased user numbers and revenue in the first quarter of 2020. NAGA CEO Benjamin Bilski commented that “besides the growing focus on health issues, many people have seemingly developed an interest in the financial markets since the onset of the crisis. We suspect that the volatile situation in the markets has attracted many new traders to enter the market, while we have also seen much greater activity from existing clients.”
In a recent interview, Bilski told Finance Magnates that the firm managed to build on the success of early 2020 and was “able to exceed the trading volume of the entire first quarter with a total of EUR 24 billion, and welcomed more new customers than in the first three months of the year together.”
As the access to traditional financial infrastructure like banks, ATMs and brick and mortar money remittance firms declined considerably in the first half of 2020, online payment processors including PayPal and Transferwise witnessed a large uptick in daily active users.
This growth looks set to continue well into 2020, as some of the largest fintech companies record significant year-on-year growth, including Dutch payment giant Adyen, which reported a 38 percent volume increase and 34 percent revenue bump between Q1 2019 and Q1 2020.
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The legal cannabis industry is booming
If there is one industry that has witnessed an incredible explosion in interest in recent months, it’s legal cannabis.
Between March and July 2020, the volume of searches for CBD-related keywords spiked by between 20 and 100 percent in most European countries, with Germany, France, Spain and the United Kingdom seeing the most significant increase in interest.
This uptick in search interest also translated into a dramatic surge in medical cannabis and CBD product sales throughout Europe, with some outlets struggling to keep up with the rampant demand among consumers — particularly in the early days of the crisis.
However, although the supply chains for many essential goods and products were disrupted due to border closures and reduced freight services, those for legal cannabis products proved flexible enough to adapt to the changing demand, maintaining a steady stream of supply in Europe.
“In the first few weeks, we noticed a degree of uncertainty. However, as the situation started to become clearer, our sales recovered dramatically and are now at an annual high, ” Nordic Oil CEO Dannie Hansen told me in a recent interview. As a leading company in the European market, the Scandinavian CBD brand serves customers throughout the EU and has expanded aggressively in recent years.
Investors looking to cash in on this growth have flocked to invest in some of Europe’s most popular cannabis exchange-traded funds (ETFs), including FLWR and the recently launched CBDX ETF — both of which have exploded in value in recent months.
It appears that this will likely continue to be the case for some time, as Bedrocan, the supplier of more than 60 percent of medicinal cannabis in Europe, still has several months of supply on hand: “At this moment, Bedrocan’s production and supply chain are not affected. As standard, we maintain several months of supply for our critical stocks. Also, in case of a crisis, we can continue to function as normal with minimal personnel,” the company said in a recent update.
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The sharing economy is poised for a dramatic recovery
Although the sharing economy was largely expected to be devastated as a result of health crisis-induced safety and cleanliness measures, some fragments of the industry have performed better than others.
Popular ride-sharing services like Uber and Yandex have actually fared surprisingly well in many areas, as overly congested public transport or a reduction in services forced essential workers and employees to consider alternative transportation methods.
Although the absolute number of riders are now down, Uber managed to supplement its income thanks to a dramatic uptick in the number of Uber Eats orders — as those staying home sought to avoid the queues and risks associated with buying groceries and other essentials.
Likewise, Russian internet giant Yandex is already making plans to finance a range of acquisition and expansion efforts with a $1 billion public and private share offering this year.
But this remarkable resilience hasn’t been observed beyond the mobility and food delivery sectors, as big names in the on-demand staffing industry, including TaskRabbit and Thumbtack, as well as the peer-to-peer accommodation industry like Airbnb and HomeAway have been struck with a shattering decline in interest.
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However, it appears likely that the entire sharing economy may be poised to snap right back into shape once things return to normal, as governments in Europe begin laying down fiscal measures to help promote spending, restore jobs and hasten the recovery of the economy. This includes offering financial incentives to employers, subsidizing meal costs, and significant investments in the tourism industry — one of the major drivers of the sharing economy.
For investors, this represents a potential opportunity to cash in on a down market by acquiring shares in the companies that are poised to bounce back in the second half of the year — if the world can get back on track by then.
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