In a nutshell:
- Overall, the global economic picture looks good. The United States’ post pandemic growth is particularly striking.
- The current lockdowns will see to it that Australian markets take a dip in Q3, but should recover as soon as restrictions are lifted.
- Sad news for aspiring homeowners, it doesn’t look like there will be a correction anytime soon.
As Australia’s two largest and most influential economic centres continue to be hobbled by the lockdowns, we sat down with BetaShares Chief Economist, AFR columnist and friend of Fox & Hare, David Bassanese for a breakdown of what Australians (and the world) might expect from financial markets in the near and distant futures.
The global economy as it stands
First, despite the doom and gloom, David believes the global economic recovery and forecast look good. The United States is a standout at the moment, eclipsing a successful but slightly less impressive performance in Europe.
In the emerging markets; after a strong initial performance and stellar job of handling the pandemic in its early stages, China’s growth has slowed. Hampered by a recent outbreak of the Delta variant and a tightening of tech industry regulations China’s initial boom has been tempered. Slow going on the vaccination front is hampering the recoveries of India, Brazil and Indonesia – but the recovery is well under way.
All in all, the global economy is slowly but surely shaking off the pandemic.
How has Australia fared?
The Australian economy has performed well over the course of the pandemic. It is going to take a dip because of the lockdowns hobbling both Sydney and Melbourne – the nations’ largest and most influential economic centres by a long stretch. There’s no doubt we’ve taken a big hit, but the recovery will likely be swift.
What on earth is going on with the Australian property market?
If David is to be believed – and we think that’d be a very wise choice – there is no relief in sight for those trying to edge into the Australia property market.
A massive demand for inner city homes, rapidly growing population and dwindling supply means a correction isn’t likely anytime soon.
Despite the surge in prices across the nation, there is one bright spot for those looking to invest in property.
Inner city apartments remain an under-utilised and underappreciated option, especially in light of our cities’ recent efforts to make urban spaces more livable.
Regional areas and even capitals outside of Sydney and Melbourne remain considerably more affordable. That affordability will introduce the extra costs involved in paying somebody else to manage the property for you – whether that cost offsets the savings from a regional buy remains to be a seen on a case by case basis.
Is property the only investment opportunity that is booming?
Technology stocks have performed incredibly well for the duration of the pandemic. Already surging before the world was forced to switch from in person to online living, the companies facilitating that shift have, naturally, performed very well.
Asian technology stocks appear to be an outlier from the general upward trend, although for many this could be seen as an opening for long term value opportunities.
The surge in tech, coupled with a hit on the value of fossil fuel companies has continued the upward trend in ethical portfolios. One of the more positive messages over the last twelve months has been the realisation that “you can profit from your principles!”.
Check out the whole interview in the video above.