Brand Share Volatility and Share Indices

Brand share volatility index refers to the index which is used in measuring the volatility of market shares among top brands in each category of product. It is the sum of absolute values of all positive and negative brand share changes. Covid-19 has affected almost every business and industry whether it is small or large. The economic impact of the coronavirus pandemic has been severe which can be seen by the massive drop in the growth rate worldwide. According to the World Bank, the global economy is expected to fall by 5.2% in the financial year 2020. The dull situation of the stock markets is the result of the frequent crashes of share markets all over the world.

“With a pandemic raging and economic growth projections looking dismal, investor sentiments are negative like never before.”

- The Economic Times

Cause of the impact

The ongoing fall in the brand share volatility index is due to the COVID-19 pandemic which has severe implications for public health as well as economic growth. The effect in the tour and travel industry, a significant decrease in the costs of transportation, fall in the tariffs rate and disruptions to the supply chain owing to the global pandemic as well as the shift of the economy to the service sector will bring a sharp decline in overall demand for the same. The economic growth globally has been significantly affected; the IMF said that this pandemic has led the world into a recession which is bad or worse even than the 2009 financial crisis. The outflow of foreign money has been seen from emerging developing economies during the pandemic with 52000 crores of equities paid by the foreign portfolio investments in the year 2020. Issues such as uncertainty of interest rates and fiscal deficits are arising due to falling tax revenues along with the increased expenditure of the governments. The worldwide lockdown due to the pandemic has not only affected the trade and commerce industry but has also negatively impacted the profits and revenues of the corporate industries. Worldwide economic recovery is expected to be hindered by a fall in consumption demand along with weak investments.

“Global stock exchanges are changing trading rules to protect their markets from intense volatility and speculative trading as the coronavirus pandemic hammers equities and threaten the world economy.”

- The Economic Times

Big brands in developed and developing countries are experiencing a big threat of losing their market share during the crisis and this threat is likely to continue for a long period of time. This pandemic has made it difficult to survive in the market with increased competition and retailers struggling to adapt to new alternatives for increasing their sales performance. The share is also likely to fall owing to a switch of the consumer to some other brand during the crisis and his choice to continue with it in the future. Though partnership between brands can be seen as an opportunity for businesses to make new relationships and continue their growth forward.

Drastic times require drastic measures

Fatpos Global predicts that these big brands are anticipated to register a significant CAGR in the coming decade. Covid-19 has affected the economy and the ease of doing business-impacting many industries. Positive management during and through the crisis can help in minimizing the losses in the medium and long term. Measures such as the adaptation of digitalization, diplomatic decisions, strategic development and adapting to operational change should be followed in order to prepare themselves for the business beyond the curve. Furthermore, the use of circuit breakers that are used for volatility control mechanisms, adjustments of pricing brands as well as exchanges and central counterparty clearings can be used to ease the financial system pressure. The world federation of exchanges is expected to launch a depositary in view of the COVID-19 situation for public communication from exchanges and CCP’s on its website, to be used as a resource for stakeholders and the financial community.