September 28, 2020
Local opportunities aplenty in post COVID-19 world
While many investors have been hit with some of the sharpest share market falls in history, as a result of the COVID-19 pandemic, others will be making the most of the market volatility to position themselves for lucrative returns.
Unexpectedly to many investors, the pandemic has made room for plenty of reliable local opportunities in a post COVID-19 world. With borders closing down and international trade and travel restricted, supply chains have been dislocated internationally. Australia has been exposed from a self-reliance point of view with the demand to support local production.
Regardless of your approach to investment, a post COVID-19 world certainly calls for a good time to review your portfolio and investment strategies given the upcoming economic crash.
The investment situation in Australia during COVID-19
As a result of the internal focus COVID-19 has created, opportunities exist to invest in. Naturally, tourism, travel, retail and education industries have witnessed the hardest hit as a result of COVID-19.
On the flip side, there are several reliable local opportunities present in a post COVID-19 world which will be discussed in detail below.
As a disclaimer, it is impossible to place certainty in predicting the direction of the market for years to come. The expectation of a market crash and an economic depression proves the instability of the stock market, placing shareholders at risk of huge losses.
For those involved in the share market, it can be tempting to hold on and ride out the downturn. However, it should be noted that the future predictability of the stock market is highly volatile given the massive uncertainty COVID-19 has placed on the economic world. With borders closing again, lockdowns being placed, and trade routes heavily restricted, the future of the share market does not look promising.
When a global situation like this happens, most industries will react negatively such as major banking and Telstra. Australian energy companies have a strong reliance on oil price and global demand, which means that a global recession will lead to Australian energy companies taking a hit.
Local investment opportunities to look out for
Despite a volatile share market, plenty of reliable local opportunities have been created as a result of COVID-19. Most of these opportunities are a result of state and federal government initiatives to support local industries from a huge downturn.
The focus on building these large infrastructure projects will generate significant construction opportunities with the added advantage of supporting supply chains both pre and post construction.
As a result of the fast track, opportunities at the start of the supply chain, such as aggregate supply and cement, will ramp up towards the end of this year.
The actual installation of infrastructure will support growth for steel fabricators, installers, and other construction sectors involved in the building process.
Once the infrastructure projects are completed, there will be a need to recycle excess product. This demand will lead to ramping up of recycling excess product, firstly due to the increase in output and secondly through the increased focus on environmentally friendly recycling programs.
One of the most significant local investment opportunities that come in a post-COVID-19 world is the increasing support of “sovereign production”.
Australia was not able to supply several necessary products and equipment, such as safety gear and personal protective equipment, during the COVID-19 outbreak. Due to the shortfall, there will be an increasing demand to ensure local capability to avoid any future repeats.
This will extend to areas such as the National Disability Insurance Scheme (NDIS) as currently, only 20% of product supplied into the NDIS program is supplied locally.
Further, the poor quality and high failure rates for products coming out of China contribute to the problem. As such, there is an expectation for increased local requirements for production overlooking sectors such as mobility aids and so on. Due to the shift in interest, there is a likelihood that industry support will be provided by the government.
Other State governments continue to provide support for smaller infrastructure programs relating to sport facility upgrades (such as Brisbane Council’s School Sport and Recreation Facility Upgrade Program), amenity development (such as City of Perth’s Wellington Square Upgrade) and so on.
These programs, albeit on a smaller scale, will have a similar effect as the larger Federal Government infrastructure projects through increased construction opportunities and supporting supply chains throughout the infrastructure program cycle.
All State governments have been getting involved in different types of infrastructure programs with a focus on enhancing supply chain outcomes that are positive to numerous industries given the COVID-19 pandemic.
This presents investors with a unique opportunity to safely invest in local industries and sovereign production as a result of COVID-19 initiatives - both at a state and federal level.
How to make the most in a post COVID-19 world
Given the unpredictable nature of the COVID-19 pandemic and its effects on your investment portfolio, it can be a relief knowing that the current market has created plenty of opportunities to take advantage of that are different to relying on the share market.
Having an insightful consultation with a capital investor can help you understand your current situation, the next best steps you should take given your portfolio, and the investment opportunities that you can take advantage of in a post COVID-19 world.
At Trinity Capital and Advisory, we take the time to understand your values, investment goals and approach. With our specialised focus in investment areas that are beneficial post COVID-19 (such as mining and automation, to name a few), our partnerships and deep insights into these industries give us an unfair advantage to high returns that are reliable.