BEIJING, April 8 (Xinhua) -- Amid the novel coronavirus epidemic, most economic activities across the world have come to a standstill. Staying indoors and social distancing have become the routine for countless people in recent days. As a result, the demand related with stay-at-home activities ballooned in a short period of time.
The sale spike of Nintendo's Switch consoles, the global sellout of accessories of the Ring Fit Adventure game needs, the craze for the Animal Crossing game, and the favor for "homebody economy" stocks, all demonstrate the phenomenon that “homebody economy” gains steam amid the coronavirus epidemic.
--"Homebody economy" demand is booming
As the coronavirus spreads, game consoles have been out of stock. Japanese gaming giant Nintendo's Switch console is reportedly facing a global shortage of its fitness ring accessory as sales soar, driven by the popularity of its two games--Ring Fit Adventure and Animal Crossing. A few days ago, a source from Nintendo revealed that Switch consoles might fall into a global shortage.
Staying indoors and social distancing have fueled a spike of demand for home entertainment. In addition to games, the demand of people staying at home for sports, streaming media, and pet care has also soared.
"During this period, we are all working at home, and are confined in limited spaces. We couldn't go to the gym, so we use Peloton more. Basically, I do spinning and yoga at home every day," a Silicon Valley worker told China Securities Journal.
Recently, California has ordered tens of millions of residents to shelter in place. Governor Gavin Newsom ordered all Californians to stay at home, except for essential things such as food, health care, etc., with an attempt to prevent the spread of the coronavirus. Silicon Valley, just south of California's San Francisco Bay Area, has also been affected by this order.
--"Homebody economy" concept stocks are sought after
Driven by the trend that people are forced to stay at home, the demand for related products surged, and concept stocks related with at-home experiences in the capital market became popular. Peloton mentioned above is one of them.
This U.S.-listed company started out as a smart spinning bike manufacturer. At present, its core products and services have been extended to cover treadmill, yoga, meditation and other fields. Not only does it produce fitness equipment and supporting software, but also provide original video fitness courses. Through the "equipment + content" mode, it has won the favor of many capital. While its stock has fluctuated since its September debut and hit a new low amid a steep sell-off on Wall Street in March, Peloton's shares have seen strong contrarian gains in recent days as the U.S. government has stepped up its efforts to contain the virus.
Streaming stocks have also experienced a growth as people around the world are stuck at home. The Sensor Tower data shows that since the outbreak, Netflix has seen significant increases in app installations in Spain and Italy. Netflix's recent rebound has clearly outperformed the market since the U.S. stock market dipped in mid-March.
Amazon is also resilient among U.S. tech giants due to its apparent e-commerce nature. Its stocks, which have held up relatively well in an environment where tech stocks have collectively tumbled, have staged a v-shaped rebound in recent days.
In addition, as pet keepers are in self-isolation at home, the demand for pet care and supplies has also increased. The stock of Chewy, a pet e-commerce company, not only showed obvious resilience as U.S. stocks tumbled, but also outperformed the market. The stock of PetMed Express, one of America’s largest pet pharmacies, has also been on the rise.
--Wall Street pays attention to "homebody economy" concept stocks
The favor for "homebody economy" concept stocks has also drawn the attention of Wall Street insiders.
Zoom video conferencing, Peloton, Teladoc, one of the world's largest tele-medicine platforms, and Clorox, the disinfectant leader, are all among the stocks that have performed well as governments intensified measures to curb the outbreak, said Jim Chanos, founder of Kynikos Associates, a hedge fund in Wall Street, adding that they will do well in the first and second quarters.
"Covid-19 didn't create the ‘homestay economy’. You know, we've spent years here moving in that direction," CNBC's Jim Cramer said, "but this outbreak's pouring fuel on the stay-at-home fire." He also laid out a shortlist of "homebody economy" concept stocks, including tech giants such as Amazon and Facebook, consumer-goods giants such as Pepsi and Costco, and featured online service providers such as Zoom. Cramer claimed that Peloton is the "ultimate 'homebody economy' concept stock".
J.P. Morgan analysts are also bullish on "market highlights" characterized by e-commerce and online subscription such as Amazon, Netflix, Facebook, Chewy and Peloton, as well as e-commerce platform Ebay, online textbook service provider Chegg and music streaming service provided Spotify. Streaming providers like Netflix and Roku have been favored by analysts at Bernstein and Bank of America and have had their price targets raised because of surging demand for streaming services.
Still, Mr. Chanos cautioned investors not to get carried away by the recent strong stocks amid the epidemic. While some of these stocks are likely to remain popular with investors in the coming weeks, some may "look less attractive" after the outbreak is over. (Edited by Gao Jingyan with Xinhua Silk Road, gaojingyan@xinhua.org)
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