personal finance

Demographics/coronavirus: longevity proclivity

Even before the pandemic, life expectancy had stalled in many rich countries. Its economic and health toll might be expected to make matters worse. But Panglossian as it may sound, some experts reckon longevity could actually rise.

This month Aon said as much to pension schemes, advising them against overreacting to recent grim mortality data. Now analysts at UBS have chipped in. The virus will be a catalyst for life expectancy — now around 80 years in OECD countries — to rise over the medium-to-long term, they argue. There will be few more positive influences on the market over the long haul.

Greater longevity is far from certain. Many pandemic-related factors push in the opposite direction. A 10 per cent decline in gross domestic product potentially lowers life expectancy at birth by half a year, OECD research suggests. 

Yet the upshot could be very different. Even cash-strapped governments will face pressure to boost spending on healthcare, which could boost life expectancy. So might better preparedness against future pandemics. Vaccine makers like Merck, GlaxoSmithKline and Sanofi could benefit from an increased urgency to address preventable diseases.

Lockdowns could worsen obesity. But Covid-19 has underlined the risks. Don’t be a fatty in your 50s, British prime minister and coronavirus survivor Boris Johnson reportedly said, after his brush with death. Expect more prevention efforts, including sugar taxes. 

The pandemic has also drawn attention to the potential of health tech, including teleconsultations, genome editing and artificial intelligence tools for drug development. Stocks like China’s Ping An Healthcare and Technology, an internet healthcare pioneer, will benefit. People are starting to look after themselves better, to judge by the demand for health trackers, smoking cessation aids and vitamins.

Long-term investors should also consider backing companies that serve an ageing population. That includes some that are currently out of favour, such as cruise operators and sheltered housing Reits (real estate investment trusts).


Leave a Reply