- Australia's economy is well positioned to rebound once declared runaway stay orders in Sydney and regional lockdowns lift as households and firms are stronger than at the beginning of the pandemic, according to the nation’s top banks.
'Australian companies are very well capitalized and liquid at the moment, said Andrew Hinchliff, group executive, institutional banking and market markets at Commonwealth Bank of Australia. 'They are particularly understepped in many ways and even the areas you might say were more stressed - aircraft, airports, student accommodation – have very strong sponsors and are well supported.
The country's housing market is also showing some resilience with Australia New Zealand Banking Corp. declaring Wednesday that it granted deferrals for roughly 1,300 loans between the end of June and Aug. 10 - just 1% of the total extended during the 2020 21.
Meanwhile, Westpac Banking Corp. s mortgage deferrals have exceeded A $1.6 billion since June, compared with A $55 billion in 2017 at its peak, even though the lender is seeing a 'little bit of stress' in its business portfolio.
'I'm certainly in the camp that activity would come back strongly when restrictions are reduced, Westpac Chief Executive Officer Peter King said on the Bank's website.
The bankers' optimistic tones combine with the Reserve Bank of Australia's decision to press ahead with its planned taper of bond purchases next month, wagering on a rapid recovery after lockdowns end. However, the highly contagious nature of the delta variant of coronavirus could mean that any rebound will be more subdued than the last year's V-shaped.
'If you compare the lockdown wave to last year we had Virgin collapse, says Chris Wyke, co-CEO of boutique investment bank and asset manager MA Financial. A lot of deal volume was evaporating because people didn't have the confidence to follow things through.
In contrast, the stock market is at all-time highs and vast amounts of stimulus cash are pumping through the economy, he added.
'There is a lot more conviction around people making business decisions with a view to looking beyond disruption, said Wyke. Still, on Wednesday, New South Wales was 633 new cases of the delta strain - a 32% surge from the last daily high recorded two days earlier - as the virus penetrates city after almost two months of lockdown.
'The emotional toll this time is higher as there is a lot of anguish around how we get out from it, said Hinchliff. But the Australian economy is so well positioned, it will come out of this in relative terms better than most.