In episode two of our fortnightly COVID-19 webinar series, healthcare sector head, Dr Nick Cameron joined Jacob Mitchell to discuss the team’s latest observations on the pandemic and its investment implications.
In this final highlight, Jacob Mitchell explains some factors investors should consider when looking towards the pandemic’s recovery phase.
This webinar was recorded on 9 April, 2020. To view the full webinar, including comprehensive insights into where Antipodes sees compelling investment opportunities, click here.
You can register for upcoming webinars in the series here.
Episode 2 Part 3 – Transcript:
Life as we know it won’t necessarily go back to the pre-COVID-19 status quo and in some ways we think the countries that have had to do less fiscal stimulus to achieve stability are probably in better shape coming out of this.
It’s really quite stark that China has only announced the equivalent of 2% of GDP in stimulus, versus the 10% that has been announced in the US and in Europe. We think that gives China a lot of flexibility to deal with COVID-19 on a longer-term basis.
The debt to GDP in the US, on the current trajectory, will potentially approach a level higher than what that economy experienced during the Second World War – that is historic. Now, we don’t know because maybe the US bounces back and the big deficits that have been forecast are too aggressive, but that is the current trajectory.
Corporates will cut costs, they’ll use COVID-19 as an excuse to do lots of restructuring so employment may rebound less strong that many expect and attitudes towards business travel and maybe office demand will be permanently changed.
The key thing to watch, I think, is house price deflation, especially in economies with high household debt – Australia, Canada, the Scandinavian economies.
And then it’s looking at changes in industry structure. Potentially in retail, you know, omnichannel survivors that have been hit hard can potentially emerge stronger.
Market leadership may change, it’s time to start thinking about the recovery cluster.
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