While the United States economy is starting to re-open, and pent-up consumer demand is leading to robust store sales, the latest news out of Asia is a stark reminder that the rest of the world is not out of the woods yet. In July, two major footwear suppliers based in Vietnam announced they were suspending production for ten days across their factories as the country tries to limit the spread of the coronavirus. In 2020, roughly 50% of all Nike branded footwear was manufactured in Vietnam. Some factory workers in the northern provinces are living in tents on the factory floor, away from their families, to keep the factories running. In Bangladesh, the second-largest apparel manufacturer globally, the garment industry employs 4.5 million people and amounts to 84% of the country’s export revenues. Recently, the Bangladesh government extended a previous lockdown for another two weeks and ordered all garment factories to close in a drastic move to contain the virus’s spread. 
The chart above shows that approximately one-quarter of the apparel exports to the United States in 2019 (pre-pandemic) originated from Vietnam and Bangladesh. So far, the lockdowns in those countries have been relatively short in nature. Yet, even these short shutdowns will impact American retailers already facing increasing consumer demand and supply chain gridlock. Unfortunately, both Vietnam and Bangladesh face an uphill battle with a significant spike in new cases and anemic full vaccination rates of less than 3% and 4%, respectively. The ability of these two countries to arrest the spread of the virus in the coming weeks and months is crucial. Time will determine the additional toll it takes from an economic and humanitarian perspective.  

The information and opinions presented in this communication are subject to change without notice, are provided for background purposes only and do not purport to be full or complete. No representation is made concerning actual future performance of investments, markets or the economy. Information obtained from outside sources is considered reliable but is not verified. Before investing, please carefully consider whether an investment is suitable for you. Past performance is not necessarily a guide to future performance and there can be no assurance that an investment’s objective will be met. Please refer to the offering document for further details of the financial commitments and risks involved in connection with investment. 

Performance information presented is not an indication of future results and index data is provided for market reference purposes only. This is not an offer to buy or sell or the solicitation of an offer to buy or sell any security/instrument or to participate in any particular trading strategy. 

This presentation is the property of Meristem, LLC and is intended solely for the use of the Meristem client, individual, or entity to whom it is addressed. This presentation may not be reproduced in any manner or re-distributed by any means without the express consent of Meristem. Mis-transmission is not intended to waive confidentiality or privilege.