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We hope that you and your loved ones are well; and that our community and markets can return to normal as soon as possible. The second stage of the $66 billion economic stimulus package was announced on Monday; and last night, the Federal Government passed the $83.6b economic stimulus package to support Australians. Below are the key areas of what this could mean for you and/or your business. We’ve also had a lot of enquiry in relation to COVID-19 and personal insurance, so we thought some quick clarification below might also help.

Stay safe.

Government Stimulus Round 2: What this means for you

The weekend saw more drama and uncertainty as more and more people are impacted by COVID-19, which now has a firm foothold in Australia. What is first and foremost a health crisis has become very quickly an economic crisis with many businesses closing their doors; markets falling at a great rate of knots; the Federal government moving to mandatorily close restaurants, cafes, bars, clubs, cinemas, and gyms; and State governments moving to shut their borders and close schools. The social reality is looking ugly with messaging on social/spatial distancing; continued panic buying at supermarkets; and the big question of a potential lock down. Read more, here.

Your Protection: quick clarity around Personal Insurance

Please be assured that most reputable insurers do not exclude pandemics; and that includes COVID-19 under the circumstances whereby health deteriorates to a point where capacity to work is reduced or eliminated.

As with any other Income Protection Claim insuring for injury or illness eliminating capacity to work, wherein COVID-19 results in job loss, the option to claim would only apply if there was a loss of income. We should make it clear that cover is purely in place to protect against injury or illness eliminating the capacity to work, rather than the impact that this pandemic might have on your business or employed position as a whole. Under Income Protection conditions, any Waiting Periods must also be satisfied first.

If you have any questions, please contact me. I always welcome the opportunity to talk about how we can support you and your family.

As you are all aware, the spread of the novel coronavirus (COVID-19) continues to escalate worldwide, despite the concerted efforts of many governments, communities, and the World Health Organisation (WHO). Last week, the WHO declared COVID-19 as a global pandemic. This is the official recognition of the severity and risk the disease poses to the global population.

There has been considerable commentary comparing COVID-19 to the normal Flu season, and while on the face of it the fatalities are not markedly different, COVID-19 is proving to be very contagious and has a significantly higher mortality rate with the old, the infirm, and the very young. So, while the risk to the young and/or healthy is well below 1%, it is the contagion risk to the more vulnerable groups of society that has exacerbated the risk posed by COVID-19 and hence the magnitude of the global response. In addition to the declaration of COVID-19 as a global pandemic, President Trump’s announcement banning all travel from mainland Europe to the US for 30 days, and the overall panic-driven behaviour in our society, further contribute to the potential large-scale impact of COVID-19.

The rapid spread of the virus and the escalation of the containment measures, such as the ongoing closure of workplaces and schools, the imposition of travel bans, and other related restrictions, have already had an economic and social impact. Developed world share markets are now in bear market territory (a fall from a recent high of over 20%) and, quite reasonably, people are worried and looking for guidance.

As we have stated in previous communications, we have no crystal ball; and after two weeks of heightened uncertainty there is no apparent end in sight. But this will end at some point, though we expect it to get worse before it starts to get better — but get better, it will.

Many are worried about the capital in their portfolios and that is completely understandable. There is no doubt that, in aggregate, corporate earnings have been negatively impacted by this event. Market reactions have, in part, reflected this, though also expressed the panic and fear of many investors. What history has shown us from an investment perspective is that holding the course at times like this, whilst uncomfortable, has, over the longer term, proven to be a good strategy. And in the absence of reliable foresight, we believe — as uncomfortable as it is at this point — maintaining your strategy and rebalancing to your respective risk profile asset allocation remains appropriate, as it is a proven process.

We hope that you and your loved ones manage to avoid COVID-19; and that our community and markets can return to normal as soon as possible.

Meanwhile, internally, our key priorities are:

• the health of our staff and our clients; and
• maintaining the quality of our service delivery.

Please be reassured, that if our staff show any symptoms, they are required to self-quarantine. On site, we have implemented enhanced hygiene procedures to limit the spread of the virus.

You may be aware that Jason Cook and Despina Cook recently completed a week-long charity bike ride in Vietnam for Multiple Sclerosis. The trip was challenging, and a great success — the team of 18 cyclists raised over $100,000. Whilst there were no Australian Government warnings for Vietnam upon departure other than to exercise usual precautions, this rapidly changed on the day of arrival back into Australia to a Restricted Travel warning. Whilst isolation for them is not mandatory given the timing of arrival, they have both consciously chosen to self-isolate as a responsible course of action to the community.

Our staff has remote access and can continue to work productively from home, where necessary. Similarly, meetings can take place via Skype, Zoom, or GoToMeeting, wherein face-to-face meetings are not essential.

Whilst we are required to respond to the current challenges through the use of technology, the personal nature of the relationships we have with you, and the quality and care of our service, remains our top priority.

If you have any questions, please contact me. I always welcome the opportunity to talk about how we can support you and your family.

The coronavirus, which has quickly spread across China and now abroad, led to a dip in global equity markets in late January. While financial markets have drawn comparison with the SARS epidemic in 2002–03 — which took approximately six months to stabilise and resulted in the death of 774 people — the speed of the coronavirus outbreak and the ultimate cost in human life is still indeterminable. Accordingly, there has been increased market volatility and it is likely that the virus will lead to a significant impact on economic growth for the first quarter of 2020 and potentially beyond.

The coronavirus originated from the Chinese city of Wuhan, 830km to the west of Shanghai and Capital of the Hubei Provence. Wuhan is located in Central eastern China and has a population of 58.5 million people. To prevent the spread of the coronavirus China has closed off the city of Wuhan, a city larger than London, and much of the Hubei province.

At the time of writing the official number of confirmed cases has risen dramatically to more than 37,500 and there have been 637 deaths — two of which have occurred outside Mainland China, one in Hong Kong and one in Philippines. There are some reports that the actual number of cases could potentially be much higher due to deaths being incorrectly attributed, as around 10 million people die in China every year, or approximately 27,000 people per day. In recent times there have been multiple viral outbreaks, for example H5N1 virus, Ebola and Swine Flu, that have threatened to become epidemics or worse, pandemics. Fortunately, this has been avoided due to concerted action on the part of governments.

The impact on financial markets so far has been mixed and to date, markets appear to have held up reasonably well even though volatility has risen. Equities have worn the brunt of the initial impact and safe-haven assets such as government bonds have rallied. Taking this a step further, in equities, Chinese and Asian markets were the hardest hit. Domestically, the major negative economic impact on Australia is likely to be on those sectors most reliant on Chinese students (education) and tourism. The mining sector will also likely suffer more heavily due to the impact of the virus on Chinese GDP and the market sentiment.

Illustrative of all major fixed income markets, Australia’s 10-year bond yield ended 2019 at 1.37% p.a. and has since fallen and reached a trough of 0.91% p.a. on 1 February 2020. Other safe-haven assets like gold, Japanese Yen and US Dollars have also gained over the last fortnight.

Over the past week, the equity markets have taken an optimistic view and looked beyond the doom and gloom of the virus despite all the negative headlines. However, the longer that the epidemic keeps spreading and the death toll rises, the more that negative sentiment will continue to weigh on markets, particularly Asian equities. There has not been any real slowing down in the rate of infection or the death rate; so, for now, the risk from the coronavirus remains real.

If you have any questions, please contact me. I always welcome the opportunity to talk about how we can support you and your family.