MUMBAI : The Covid-19 epidemic will impact asset valuations temporarily, but could offer more attractive opportunities to deploy capital than what most investors anticipate, Blackstone Group chairman, CEO and co-founder Stephen Schwarzman said.
The virus has killed more than 3,000 people globally so far, while the number of positive cases in India has now shot up to 29.
“In our business we call this a Black Swan event. It is completely unanticipated but here you are. The assets you own will go down in value temporarily, but the opportunity to deploy capital, I think, will be greater than what people suspect," Schwarzman, who is in India on a three-day visit, said in an interview on Wednesday.
Schwarzman founded Blackstone in the 1980s with his partner Pete Peterson. Today, Blackstone manages investments of more than $500 billion across asset classes such as private equity, real estate, credit, and others. It is the world’s largest alternative asset manager by assets under management (AUM).
“Around the world we are going to be seeing other types of disruption, which will force certain owners of assets to sell things or need capital, particularly in markets that have weak banking systems. So, I think there will be a variety of unanticipated opportunities for us that come as part of a global situation," he said.
In the near term, the spread of Covid-19 is a bigger challenge for the global economy than trade wars and geopolitical tensions, Schwarzman said.
“I am less concerned about trade tensions than some other things. The coronavirus really upended expectations for the current year. I think it will take down global gross domestic product," said Schwarzman.
The pandemic will have a major impact on certain industries such as travel, across the whole chain, whether they are airlines, hotels or cruise ships, Schwarzman said. Companies that are present in certain markets such as China will feel the impact, he added. “There will be disruptions in supply chains, which will also decrease growth rates," Schwarzman said.
This is another one of those periods where a lot of factors are determining the outcomes that were somewhat unanticipated, he said.
However, Schwarzman said that given that there appears to be a roadmap for drug development for the virus, the spread of the disease could eventually have a limited impact.
“All the experts say that it should be at least a year or a year and a quarter before a vaccine gets developed. So unlike some crisis that you don’t know how they are going to end, this one seems to have a roadmap with development of vaccines and there could be other medicines that could be useful in the short term," said Schwarzman.
“So we are dealing, most probably, with a crisis of a limited dimension, other than the fact that once you start an economic decline then that has its own momentum," he said.
