COVID-19 is disrupting supply chains but the greater risk may be a drop in consumer demand. This is already showing up in China’s economic data. This could very well spread to other countries as community spread ramps up. Apple is down 20% off its high and the oil sector is signaling a recession with crude now down 26% year to date. The IXP ETF which tracks the global telecom industry, splitting holdings between U.S. and international stocks is down 10% this week as investors and economist start to model the economic impact of technology deployments, demand, and supply channel disruptions. It tracks traditional CSPs like AT&T, NTT, DT, and Vodafone but also Facebook, Google, and others. We won’t know for sure if this is a rear view mirror event six months from now or something more significant until health officials get their arms around the COVID-19 virus. Look for more supply chain disruptions and travel restrictions to be imposed in the near term which will have a negative effect on business activity, revenue, and profits. The telecom sector will be impacted but not to the same degree as oil, airline, and travel related industries. For now all eyes are on WHO and the CDC.
