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Hedge Clippings | Friday, 31 July 2020
The rapid rise in the number of cases of COVID in Victoria, and to a lesser degree (so far) in NSW, is a stark reminder - if needed - that there's a long and winding road ahead before we're out of the physical and medical dangers of the pandemic. Far from the numbers declining, or even being under control, they're increasing rapidly, while in the US and Europe they seem disastrous.
And just when it looked as if the government would be able to start selectively weaning sections of the community off their Job Seeker and Job Keeper payments at the end of September, there's every chance that, in some states at least, they're going to become more dependant. And with Victoria and NSW having the largest populations, the flow-on effects of border closures will prolong the impact and damage on the tourism sector in Queensland in particular.
In the short term, investors and fund managers will not only have to consider the geographic effect on companies, but will also have to navigate the upcoming reporting season. In the longer term, governments, and all who live under them, will have to consider and navigate the debt mountain that COVID has created.
These are sobering, and worrying times, but as always there will be winners and losers. From the investor's perspective, investment and fund selection decisions are going to be more critical than ever. High yielding investments - provided they're not also high risk - will appear on more approved product lists. One would suspect that dividends will be reduced further, with the trickle-down effects on investors' spending habits having further negative effects on the economy.
Just as well - there's not much most Victorians can do, or places they can go, to spend what income they have anyway. Maybe one of the few bright spots will be Dan Murphy's (and others') online ordering and delivery services...
Which reminds me, it's Friday, and nearly drink o'clock.
News & Insights
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