Immigration in the aftermath of COVID-19
Kim Catechis and Matthew Davison, Senior Research Analyst, Martin Currie Australia discuss the impact of COVID-19 border lockdowns on parts of the economy reliant on immigration and overseas payments & remittances.
Aftermath series
This video is part of our weekly AFTERMATH video series led by Kim Catechis, Head of Investment Strategy, where members of the Martin Currie investment team discuss the far-reaching impacts of COVID-19 on the economy, the equity market, society, politics, the environment and our portfolios.
It’s flowing through to a lot of higher-order industries as well, and universities are good example, particularly here in Australia, that have been heavily affected
Script
Kim: Hello again, and welcome to another edition of the AFTERMATH. Today, we are looking at the question of migration and remittances around the world. And with me, to help me parse through this, I have Matt Davison from our Melbourne office. Matt, really good to see you.
Matt: Hi Kim, really good to speak with you too.
Kim: Matt, you know we are looking at a world that’s basically splintering economically, diplomatically. The consensus that we are used to is gone, and you know in the research for the AFTERMATH we’ve discovered that remittances represent significant economic importance for a bunch of countries, even those that you might consider to be kind of middle income countries, and obviously supporting not only the people but obviously businesses as well. So, how do you see this?
Matt: Yeah absolutely Kim, the splintering is certainly a risk going forward, I think the workers will probably continue to flow in the future as the demand is there, and that will be a temporary setback for some of the poorer countries. But when you think more broadly, it’s not just about manual labour, is it, it’s got the potential to extend a lot further into the different payments areas and different parts of the economy that are really dependent on migration at a higher level.
Kim: Yeah, and I guess it’s not just the workers Matt, right, because there’s all these middle class students from all around the world, they travel to places like Australia, the UK, the US etc to do their degrees. A lot of that has probably stopped short term, turned online because of COVID-19, but it may not even return given, especially the fractures in diplomatic relations between China and maybe Australia and the US etc. What’s your take on that one?
Matt: Absolutely Kim, it’s flowing through to a lot of higher-order industries as well, and universities are really good example, particularly here in Australia it’s been heavily affected.
I think also when you take a step back and think about the repercussions more broadly, there is lots of subsectors that will be impacted, payments companies that operate in particular niches, or corridors, could be hurt.
Then when you think about the migration changes, certain countries get their GDP model effected, but other countries may have their housing markets quite disrupted by that as well.
Then maybe when we think back to payments, clearly digital delivery has had a massive boost through all this and that’s going to mean that certain platforms and certain payment rails are going to gain more support going forward. And I guess we can ask the question, is your payments business looking more to e-commerce than travel? You’d be doing a lot better at the current point in time.
Going forward when we think about the acceleration in the digital delivery of remittances and other payments methods, which banks and which telcos are really partnering with the companies that are moving digital.
Kim: Yeah, that’s a really good point and now you’re talking digital, you know I guess, the fourth revolution, the industrial revolution etc., is all going to be based on digital cloud and 5G. And obviously that is a subject for a different call, but basically, it’s another area where the world is splitting into two. So my base case is now that you end up with basically two spheres of economical influence, and you got China belt and road, infrastructure companies, the US and western markets. What’s your take for investors here?
Matt: Yeah it’s a really interesting point, maybe the situation doesn’t deteriorate quite so dramatically, but certainly something we have to watch out for in the policy direction and something to think about going forward.
Presently you’re really seeing this battle in payments for the, I guess the online checkout part, maybe we need to think about that more in terms of the different spheres of influence around the world and how the payments companies are really integrating into that.
I think also there are other areas like business to business and how that gets disrupted, whether from a payments perspective or a broader commerce perspective as well. Everyone is looking to solve pain points at the moment but does this create some prolonging off the existing pain points as well?
Kim: That’s a really good point. Matt this has been really helpful, thanks very much for your time.
Thank you for your time, tuning in and please come back next week, we will have something again, completely different.
Regulatory information and risk warnings
Past performance is not a guide to future returns
This information is issued and approved by Martin Currie Investment Management Limited (‘MCIM’). It does not constitute investment advice. Market and currency movements may cause the capital value of shares, and the income from them, to fall as well as rise and you may get back less than you invested.
The opinions contained in this recording are those of the named manager. They may not necessarily represent the views of other Martin Currie managers, strategies or funds. These opinions are not intended to be a forecast of future events, research, a guarantee of future results or investment advice.
The analysis of Environmental, Social and Governance (ESG) factors form an important part of the investment process and helps inform investment decisions. A strategy does not necessarily target particular sustainability outcomes.
The information contained has been complied with considerable care to ensure its accuracy. However, no representation or warranty, express or implied, is made to its accuracy or completeness. Martin Currie has procured any research or analysis contained in this recording for its own use. It is provided to you only incidentally and any opinions expressed are subject to change without notice.
The information provided should not be considered a recommendation to purchase or sell any particular security. It should not be assumed that any of the security transactions discussed here were, or will prove to be, profitable.
Tel: 44 (0) 131 229 5252 Fax: 44 (0) 131 228 5959 Authorised and regulated by the Financial Conduct Authority. Please note that calls to the above number may be recorded.
For wholesale investors in Australia: This information is issued and approved by Martin Currie Investment Management Limited ('MCIM'). It does not constitute investment advice. Any distribution of this material in Australia is by Martin Currie Australia Limited ('MCA'). Martin Currie Australia is a division of Legg Mason Asset Management Australia Limited (ABN 76 004 835 849). Legg Mason Asset Management Australia Limited holds an Australian Financial Services Licence (AFSL No. AFSL240827) issued pursuant to the Corporations Act 2001.
For institutional investors in the USA: The information contained within this presentation is for Institutional Investors only who meet the definition of Accredited Investor as defined in Rule 501 of the United States Securities Act of 1933, as amended (‘The 1933 Act’) and the definition of Qualified Purchasers as defined in section 2 (a) (51) (A) of the United States Investment Company Act of 1940, as amended (‘the 1940 Act’). It is not for intended for use by members of the general public.