Macquarie chief executive Shemara Wikramanayake said that capital raisings show investors are confident about the future for Australian companies in a post-COVID-19 environment.
Ms Wikramanayake told the Macquarie Australia Conference that companies and investors are preoccupied with two questions – “what can we expect next and when will markets adjust to a new normal?”
In the short term, the global economy is set for recession as “governments begin to walk back from their sudden economic stops made in an effort to contain the virus,” Ms Wikramanayake said.
But quantifying the magnitude of the near term hit to growth “with any certainty is very challenging,” she said.
The bank chief praised the actions of central banks and governments around the world for their quick actions in countering the spread of the virus and pointed to a flattening of the infection curve in many countries in the last few days.
“We have seen central banks respond quickly by easing monetary policy where possible and recommending large scale asset purchases
“Governments, have also been quick to action fiscal stimulus measures to support the labour force and businesses,. so that once the spread is contained economies are better positioned to emerge from hibernation.”
Ms Wikramanayake said that, in times when economic uncertainty is high, a long-term approach becomes more important along with a “focus on the areas that continue to drive global demand and ongoing investment.”
“There are strong long term fundamentals that will re-emerge as we move beyond this crisis,” she said. For example, urbanisation and population growth will continue to drive demand for infrastructure, the bank chief argued.
“We will see technology further enhance areas such as healthcare, education and the work place in general,” she said.
Australia’s stable political system will help the recovery here, she said, while highlighting the country’s connectivity to long-term growth in the Asian region.
“Australia is well placed to resume its economic opportunities within the broader region,” she said.
Australia has moved quickly to facilitate recapitalisation for its firms and the ASX has been the most active equity market in recent weeks, she said. “Demand for those raisings is a sign of confidence in the Australian market and companies in general.”
Source: Australian Financial Review