April 29, 2020

April 29, 2020 | Adviser News


Economic Update: COVID-19

Patrick Noble, Senior Investment Strategist at Zurich Investments

The More Things Change the More They Stay the Same

With the spread of the coronavirus dramatically slowing in Australia, talk of easing social distancing restrictions is gaining momentum. It is natural to start thinking about a return to normal life, but will the population simply come out of hibernation? While some may jump at the chance of going to the gym, bar or other social event, other surveys have suggested that many may prefer to stay out of harms-way- avoiding activities such as travel, going to the movies or large sporting events.

In the absence of an effective anti-viral or vaccine, a full return to “normalcy” may still seem fanciful but it’s also worth asking if our way of life, our day to day habits, have permanently changed in this short period of time.

  • Will working from home become more prominent or do you miss the office? Do you prefer video conferencing or face to face meetings?
  • Are you now an online gamer or do you miss your weekly sport?
  • Have you shopped more online or has the experience disappointed? Waiting two weeks for your grocery delivery only to find out you didn’t get toilet paper can literally be a bummer.

Habits are notoriously hard to change but there’s no doubt social distancing will have some longer term impacts and hopefully for the better.

For instance, public transport should not be a petri dish of herd immunity and technology has demonstrated that large swathes of the population can work from home. Rather than taking the flu to the office, common sense should dictate flexible working arrangements. But this doesn’t mean we’ll completely desert the office either. A daily commute still maintains appeal and may even be gaining in appreciation given recent isolation policies.

One thing we do know is that change is constant. Whilst the change foisted upon us by coronavirus has been abrupt, our ability to quickly adapt has been premised on changes taking place over many years. In the technology space, cloud computing, software applications and cashless payment systems immediately spring to mind. However huge structural changes have also been afoot in geopolitics, monetary and economic policy, and sustainability.

The short-term impact of hoarding and outsized supermarket sales will pale in comparison to the influence of these long-term changes. What does the next decade look like given de-globalisation, record fiscal spending and “helicopter money”, and how will policy achieve societal goals? Given the potential for significant policy shifts, now may be the time for sustainability considerations to become more of a priority for investors, companies, and governments.

The specifics of the recent pandemic event need to be analysed in conjunction with underlying change that was already occurring within these four pillars.  The impact of the pandemic will be to accelerate, not alter, the processes of structural change described above.

Important information: The content of this publication are the opinions of the writer and is intended as general information only which does not take into account the personal investment objectives, financial situation or needs of any person. It is dated April 2020, is given in good faith and is derived from sources believed to be accurate as at this date, which may be subject to change. It should not be considered to be a comprehensive statement on any matter and should not be relied on as such.  Past performance is not a reliable indicator of future performance and should be used as a general guide only. Neither Zurich Australia Limited ABN 92 000 010 195 AFSL 232510, nor Zurich Investment Management Limited ABN 56 063 278 400 AFSL 232511 of 5 Blue Street North Sydney NSW 2060, nor any of its related entities, employees or directors (Zurich) give any warranty of reliability or accuracy nor accept any responsibility arising in any way including by reason of negligence for errors and omissions. Zurich recommends investors seek advice from appropriately qualified financial advisers. Zurich and its related entities receive remuneration such as fees, charges and premiums for the financial products which they issue. Details of these payments can be found in the relevant fund Product Disclosure Statement. No part of this document may be reproduced without prior written permission from Zurich.

Past performance is not reliable indicator of future performance. GINN XYY9MQ.00000.SP.03. PNOE-015530-2020

For previous updates, click below:

❯  16 March 2020
❯  23 March 2020
❯  31 March 2020
❯    6 April 2020
❯  14 April 2020
❯  20 April 2020

To hear directly from our Fund Manager partners on their views, click the links below:

❯  American Century Investments

❯  Celeste

❯  Lazard

❯  Renaissance