The COVID Diaries: investor 7
The following interview is with an Australian-based fixed-income investor. It was conducted on 4 June 2020.
Does your business have a timeline for returning to office working – and are you looking forward to it?
It is commonly accepted at this stage that Australia and New Zealand have done relatively well in the phase of the crisis where public health was the number one priority. Is it now time – at the margin at least – to change the emphasis towards reopening the economy?
The great advantage in Australia is that we have had very few cases; hence testing, contract tracing and isolation of the few cases we have are very effective in containing any outbreaks. This will likely allow us to open up restrictions more than other countries. Europe and the US have so many cases, and so many people in the population with the virus, that they largely have to rely on social distancing alone to keep the virus suppressed.
“I am less confident of a V-shaped recovery than the equity markets appear to be pricing in. Equity markets seem to be far too optimistic at this point, where there is still a long way to go and a lot to play out.”
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?
It also seems those that do get COVID-19 and recover, to my knowledge, do not have lasting effects. They seem to make a full recovery, which is also encouraging.
I am more pessimistic on the economic side. I am less confident of a V-shaped recovery than the equity markets appear to be pricing in. Equity markets seem to be far too optimistic at this point, where there is still a long way to go and a lot to play out. I think there will be some negative and long-lasting economic effects
What do you think about optimism in debt markets – is it justified by all the government support that has been injected?
In debt markets, the RBA [Reserve Bank of Australia] has made it clear no ADI [authorised deposit-taking institution] will fail for liquidity reasons. The issue then, longer term, becomes one of solvency. But this is a long-term issue and we will just have to see how the economics play out for corporate defaults, and potential housing market depreciation and mortgage defaults. This is an unknown and seems some way down the track if it is to occur at all, particularly with regard to mortgage defaults.
When do you think you will next get on a plane? Are you looking forward to or dreading travelling again, for business and leisure?
For business, most of my travel is done by car and this has been curtailed. Many clients are working from home and it is difficult to arrange face-to-face meetings. For existing clients, Zoom and Teams meetings work well. But I am finding virtual meetings do not work as well when pitching for new business.
What are you most looking forward to being able to do again, as restrictions ease in the coming weeks and months?