The COVID Diaries: investor 5

The following interview is with an Australian-based fixed-income investor. It was conducted on 28 April 2020.

Do you feel you have adapted to working from home and how close are you to business as usual – personally and in the sense of market functionality?

On the trading side it is okay. We are set up at home and it is working well. We all have phones and we have team calls every day, as well as Bloomberg chats. We have managed to get around some of the communication challenges and maintain good levels of contact with colleagues.

Has your view of the crisis and the nature of the challenges it presents changed? It seems Australia has prioritised public health over the economy, at least in the medium term. How are you thinking about that trade off?

I think there are three challenges: health, economy and financial markets. In financial markets the central bank has done a lot to make things on the functional side and this has happened in most jurisdictions.

Between health and the economy, it is a delicate balance. The shutdown is obviously causing a lot of pain and I think at some stage the government will need to gradually open the economy. The two are interlinked, though. If the economy opens too early you could end up with a problem like in Singapore where they have had a second outbreak and had to close the economy again. This causes more economic harm, so keeping the economy closed for the moment is probably the right thing to do.

When I think about the economy, I think in the medium-to-long term rather than short term. The question should be how we manage the health crisis in a way that is setting up the economy to do the best it can in the long term.

There will obviously be short-term costs, but if it sets the economy up to do well in the long term it is a good thing. Ideally, the government can use fiscal policy to plug gaps as best as possible to buy time in the short term if there is an economic decline.

“Through capital allocation resources will adjust in a way to adapt to the new environment. There are always losses in periods of agitation, but I think the economy will recover again.”

Are you more or less optimistic about the crisis than you were during the early acceleration period of moving to home working and adding social distancing measures?

I am always optimistic. Whether it is this crisis, or any other crises or deep recession, at the time things feel quite bleak but we always get through them.

Eventually there will be a vaccine. This could be 6-18 months away, but I think it is a question of when rather than if. This would be a game changer. With all the research and development focus being placed on this, hopefully it will be sooner rather than later.

How do you think things will be different when we get back to normal? What changes can you see to work practices, social changes and the economy?

If we go back to work relatively soon but the vaccine doesn’t come until this time next year, we will have 12 months where we will need to be very careful with a degree of social distancing in place.

This will affect certain businesses. Some businesses will undergo structural changes and will need to adapt their business models. There may also be some permanent losers.

Overall, though, the economy will adjust. Through capital allocation resources will adjust in a way to adapt to the new environment. There are always losses in periods of agitation, but I think the economy will recover.

We have been asking people what they have been reading relating to the crisis but we think everyone has seen enough by this stage. So what are your entertainment recommendations for lockdown: books, TV etc?

I have a long book list which I am getting through. At the moment I am reading about the history of merchant trading in Asia.

There are other things you can do obviously like watching movies and television. But another is to have more chats with family members. We are having more time together so can reflect and connect a lot more, which is good.

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