Australian unemployment rose to 7.4%, but if you add those on JobKeeper this number would be 13%+. We remain of the view that ongoing support will be needed beyond the initial JobKeeper period – regardless of what they name it. Clearly this unemployment number will be further affected by Victorian lockdowns – as well as any other states which follow suit.
The rise in Victorian Covid-19 numbers over the past 2-3 weeks shows how quickly this virus moves. It is also a reminder that we need to find a way to live with this situation. We expect a confidence boost for markets when we get a finalised vaccine. But virus mutations mean that this is not a solution, more a short-term fix. Either way the effect on economies and therefore stock markets will free people from lockdown to live more normally. We will simply learn to cope with the coronavirus.
There is a lot of effort
required to get the economy started again.
The most recent endeavour from the government is the JobTrainer package
to help improve employment prospects which will help by upskilling the
workforce – when there are vacancies to be filled.
The government’s challenge is to keep up the support to overcome the damage of locking the nation down. We are keenly interested in the details of the budget and economic update due in a week.
The Trump administration is considering a ban that would prevent members of the Chinese Communist Party and their families from traveling to the US. This comes on top of the travel ban for employees of Chinese technology group Huawei. With luck this is something Australia won’t include itself in. But as deputy sheriff there is always a possibility.
Why is it a bad idea to get involved? Lets examine the effects of publicly backing the US in the recent past, which caused the latest retaliation by China. It is larger than most understand. Aside from mining, our three biggest exports are education, wine and beef. They sum $135bn in revenues into Australia.
Chinese officials made a statement suggesting tourism to Australia is not advised as a result of discrimination against Chinese people in Australia. Furthermore, education in Australia should be rethought. The Chinese people have been told of verbal abuse, physical abuse and bullying, physical assault and murder. This is serious for Australia and its exports.
There were 200,000 Chinese citizens enrolled in Australian educational facilities. A recent academic survey shows that approximately half of the surveyed participants have decided not to return to Australia. Furthermore, half of those considering future study in Australia have decided against it. That’s up to 100,000 fewer students coming to Australia. Its not just the education fees (which are typically double the going rate), it is the lecturers, tutors, teachers, administrators, accountants, gardeners, rental properties, tourism, meals, food, family visitation, immigration … etc etc.
By copying the US actions towards China we have put our strong position in the region into jeopardy. At a time when we need jobs …
Overall, we are confident of a return to 6800 on the ASX200 early in 2021. We believe the market has fought through the plethora of negatives which caused it to go sideways for the past 6 weeks. We expect it to begin to move forward from here.