Invest
Why border closures won’t impact Australia’s economic recovery
An increase in COVID-19 cases coming out of Victoria is unlikely to slow down Australia’s economic recovery from the pandemic, experts have noted.
Why border closures won’t impact Australia’s economic recovery
An increase in COVID-19 cases coming out of Victoria is unlikely to slow down Australia’s economic recovery from the pandemic, experts have noted.
As NSW re-closes its border to Victoria tonight to stop the virus spreading, Fidelity International portfolio manager Kate Howitt explained why an increase in cases should not frighten investors.
“I think we should’ve been expecting that we weren’t going to be completely clear of this immediately,” Ms Howitt said.
“I think it’s helpful we now need to do selective lockdowns rather than broad-based across the entire nation or even the entire state.”
She also highlighted that the world is better prepared for increasing cases of COVID-19.
“I think we are clearly getting better at tracking and tracing, quarantining and all of those basic procedures,” she explained.
However, Ms Howitt noted Australia is not out of the woods from an economic point of view, due to international tourism and migration supporting Australian growth.
“So, the bigger issue for the Australian economy is actually going to be when we are able to open up internationally.
“Because that is when you get an influx of temporary visa holders, which was about 10 per cent of the population at the peak.
“Until we can get back to that level of temporary population growth, then it’s going to be hard for a lot of sectors to reclaim the levels they were at before we got into the pandemic,” Ms Howitt said.
Nikki Thomas, portfolio manager at Alphinity Investment Management, told investors the difference between Australia’s COVID-19 experience and much of the rest of the world and why that needs to be factored in to international investments.
“I’d also clarify the issue around the second wave. If we look at seven days around the world and think about it as continents, only Europe and Oceania have flattened the curve,” she said.
“Asia has never flattened the curve, neither have the US or Latin America. So the re-acceleration of cases is actually still the first wave,” Ms Thomas said.
While highlighting that much of the world is still in the first wave, she explained how different approaches to the pandemic has had an impact on the economy.
“What I think is really interesting is there are places like the US which are making a conscious decision to just live with this.
“Just to accept there are going to be rises, until they get to a place where hospital cases are rising and they can’t cope again,” Ms Thomas said.
Ms Thomas questioned whether further lockdowns would happen or whether society will have a Swedish experience, with countries simply living with the virus.
“While death rates will be sadly a lot worse like they have been in markets like Australia, the economic impact of this is considered too great to go into significant lockdown.
“I think the experience is very different across different parts of the world,” Ms Thomas said.
Ned Bell, chief investment officer of Bell Asset Management, explained that investors might need to alter investment strategies due to market pricing in a strong recovery.
“I think the question you have to ask yourself is how many companies can actually come out the other side of COVID and survive.
“The reality is there are a lot of really challenged companies that have distressed debt levels and taken huge earning hits.
“I think markets are pricing in a seamless recovery, which as days go by just seems less and less likely,” Mr Bell concluded.
About the author
About the author
Stock market
Headwinds to outnumber tailwinds in 2022
Headwinds are likely to outnumber tailwinds in 2022 as the world continues to readjust to the post-pandemic era, one expert has said. ...Read more
Stock market
Aussies can now net frequent flyer points by trading stocks
Superhero is looking to sweeten the deal for traders who are excited for the return of international travel. ...Read more
Stock market
Facebook debuts new name
Zuck gets meta. ...Read more
Stock market
2 big questions investors should ask as Australia reopens
Investors need to stop thinking about how to profit from the mineral sector’s struggles, and start looking at when the best time to ride the recovery will be. ...Read more
Stock market
Trading app popularity skyrockets as retail sector booms
In 2021, trading has never been easier for retail investors, meaning the number of users on trading applications has exploded to an all-time high. ...Read more
Stock market
ETF rush predicted to intensify
The Australian ETF sector advanced AU$6.3 billion in August to hit a new milestone, as its popularity among financial advisers soared. ...Read more
Stock market
The 6 unique Australian market affects that all active managers can exploit
The uniqueness of the Australian equities market is providing fund managers with an opportunity to essentially beat the market, new research has revealed. ...Read more
Stock market
‘Don’t believe the hype’: ASIC warns of risks for new market participants
ASIC has expressed concern that inexperienced or uninformed investors are putting their capital at unnecessary risk when tempted into the market by questionable marketing strategies from market promot...Read more
Wrapping up an eventful 2021
Listen now
What Omicron means for property, and are units right for first-time buyers? What is equity crowdfunding? Are industry super funds tapping into member funds to save their skins?
Listen now
Will housing affordability improve in 2022? Will buy now, pay later become the norm? Why are Aussies staying in failing super products?
Listen now
Who really benefits from crypto ETFs? How will the RBA respond to rising inflation? Could a mandate help address unpaid super?
Listen now
Stock market
Headwinds to outnumber tailwinds in 2022
Headwinds are likely to outnumber tailwinds in 2022 as the world continues to readjust to the post-pandemic era, one expert has said. ...Read more
Stock market
Aussies can now net frequent flyer points by trading stocks
Superhero is looking to sweeten the deal for traders who are excited for the return of international travel. ...Read more
Stock market
Facebook debuts new name
Zuck gets meta. ...Read more
Stock market
2 big questions investors should ask as Australia reopens
Investors need to stop thinking about how to profit from the mineral sector’s struggles, and start looking at when the best time to ride the recovery will be. ...Read more
Stock market
Trading app popularity skyrockets as retail sector booms
In 2021, trading has never been easier for retail investors, meaning the number of users on trading applications has exploded to an all-time high. ...Read more
Stock market
ETF rush predicted to intensify
The Australian ETF sector advanced AU$6.3 billion in August to hit a new milestone, as its popularity among financial advisers soared. ...Read more
Stock market
The 6 unique Australian market affects that all active managers can exploit
The uniqueness of the Australian equities market is providing fund managers with an opportunity to essentially beat the market, new research has revealed. ...Read more
Stock market
‘Don’t believe the hype’: ASIC warns of risks for new market participants
ASIC has expressed concern that inexperienced or uninformed investors are putting their capital at unnecessary risk when tempted into the market by questionable marketing strategies from market promot...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
