Despite being at the vanguard of dealing and managing COVID-19 so far, Australia covid vaccine has had one of the slowest vaccination rates in the world. Not only does this have an effect on the people of our population, but also our economy and our stock market. Here’s why:
As one of the more remote and isolated islands on planet Earth. And Australia covid vaccine has done very well keeping its borders shut. And the virus contained having only few cases compared to more dense populations. Also, like the US or the UK for example. Whilst politicians may beat their chests. And claim to have contained the virus. This comes at a huge cost to people’s lives given snap lockdown measures. And tough restrictions imposing on our quality of life.
Yes, playing politics may be good for your election. However, the psychological damage on people is something that host Andrew Baxter says we may not see the true effect of until a couple of years down the track. And the siege mentality is great and has worked thus far, but at what cost?
Vaccination Rates in Australia vs. the Rest of the World
Australia covid vaccine rollout is realistically something of a ‘strollout’. Having one of the slowest vaccination rates in the world. And Australia is still force into snap lockdowns. Especially, travel restrictions given only 7% of our population has had jabs in arms.
Compare this to other countries of the world like the UK. And the US for example who have vaccination rates of 50% and 47% respectively. These guys are now free to travel across states and even dance at weddings (wow!). Why is this? Host Andrew Baxter believes it’s due to the lack of unity across our government.
Having a federal government with essentially no power whatsoever. And a bunch of bipartisan state governments means everyone is on different wavelengths. And mostly struggle to come to any sort of agreement – especially on the vaccination program. For any overseas investor. And this presents a high sovereign risk in what could deemed as an ‘ungovernable’ country. Also, which at this stage is probably fairly accurate (que: hate mail).
Vaccine Strollouts Effect on the Economy
Once again comparing this to the economy of the US given they’re nearly 7x better off as per their vaccination rate – here is an economy that is raging across a multitude of areas. Despite record low interest rates. And a raging property market. The Australian economy is nowhere near the strength of the US economy due to the fact. That we have suffered in crucial sectors like travel, hotels, and hospitality.
For those who say our economy is booming. And host Andrew Baxter suggests paying a visit to a hotel provider in North QLD for example and asking how they feel the economy has been travelling to them. Without a decent vaccination program. And we can’t travel nor eat out given snap lockdowns. Also, restrictions are our only method of containment at this point. With an economic cost of nearly $1b a week, yes, our economy is strong. But only in a few very specific areas.
Vaccine Strollouts Effect on the Stock Market
Vaccines are good for the stock market given it gives investors hope of a swifter economic reopening. Upon the US rollout of their vaccine, we saw value stocks (ie. more ‘cyclical stocks’ tied to the economy) add on huge gains alongside high growth stocks in the tech space.
As investors became evermore optimistic about getting back to normal – travel, airline, hospitality, financials and industrial stocks all rose on the back of such rollout. Here in Australia, we’ve seen nothing short of the exact opposite. We don’t have people getting jabs and therefore much less certainty surrounding our economic reopening. We may have had a great run since March 2020, however, in the last 2-3 months our market has been pretty much range bound and struggling to breakthrough our February 2020 highs.
Compare this to the S&P500 in the US which has hit its 6th straight day of record highs – clearly a paradigm difference between stock markets based largely around vaccination rates. The numbers don’t lie and as the single best indicator of economic strength, the difference in stock markets says it all.
Opportunities to be Had
Given our lag behind the US economy and stock market we can make some informed judgements for our market here in Australia as we slowly begin to catch up. Host Andrew Baxter suggests focusing on traditional stocks that will benefit from larger foot traffic amidst a further vaccine rollout.
There are opportunities to be had as an investor given you can pick these kinds of businesses up cheap now with benefits likely to come over the long-term. Ultimately, our vaccine rollout is going to have to speed up at some point in order to catch up with the rest of the world. This barbwire fence we have up on our borders at the moment and snap lockdown calls from state governments can’t last forever – when it stops, our stock market could be off to the races. To learn more, reach out to Australian Investment Education.