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A record economic downturn and the harshest travel restrictions since World War II are the ultimate time to invest in shares.

The coronavirus pandemic has battered the tourism industry and crippled airlines while tensions with China are stirring diplomatic fears about Australia’s biggest trading partner.

While it may seem counter-intuitive, an expert has told Daily Mail Australia the COVID-19 crisis is an ideal time to buy shares for a bargain price before the economy recovers again.

Qantas 

Greg Smith, the head of research with funds manager and share market advisory group Fat Prophets , said the border closures were likely to boost Qantas in the longer-term, as its rival Virgin Australia scaled back to survive under new American private equity owner, Bain Capital.

Before the pandemic, Qantas already had a 60 per cent market share, 우리카지노사이트 despite Virgin making losses year after year in a bid to have a bigger slice of the air travel dollar.

‘Virgin is going to be a smaller airline than it was – that provides an opportunity for Qantas to grow domestic market share,’ Mr Smith said.

The reopening of state borders in 2021 would also put Qantas in a prime position to command more than two-thirds of the market for flights within Australia.

‘They might get up towards 70 per cent once domestic capacity opens up completely,’ Mr Smith said.

While 2020 has been an ‘unprecedentedly traumatic’ time for airlines, Mr Smith said the eventual opening up of travel to New Zealand would leave Qantas much better placed than Virgin to capitalise on the resumption of international flights.

The Qantas share price plunged from $6.67 on February 20 – just before the share market peaked – to $2.14 in March as Australia’s border was closed to non-residents and non-citizens .

As of Monday, it was trading at $4.34 on the Australian Securities Exchange.

Mr Smith expected the flying kangaroo airline’s share price to hit pre-pandemic levels above $6 in 2021.

‘When international capacity resumes, a lot of airlines may not make it back,’ he said.

‘Presuming we have a vaccine, at some point next year, we can get back towards the $6 mark. 

‘Even without a vaccine, we can get above the $5 mark.’

BHP and Rio Tinto

China has punished Australia’s barley producers and its ambassador to Australia Cheng Jingye has threatened trade boycotts on Australian exports of university education, wine and tourism.

Australia’s biggest trading partner, however, still needs iron ore, the commodity used to make steel as part of its manufacturing-led recovery from coronavirus.

Brazil isn’t yet back to full capacity, following the Vale tailings dam collapse in January last year, while the Simandou mine at Guinea in west Africa isn’t yet operational.

Mr Smith said this meant BHP and Rio Tinto would be good investments, with the iron ore price at $US121.44 per metric tonne, a significant increase from $US75.26 in April.

He expected BHP’s share price to rise from $36.52 as of Monday to levels above $40 in 2021 as Rio Tinto’s share price climbed from $95.76 to $103. 

‘China may grumble about various things but the reality is they haven’t got too many places for iron ore,’ Mr Smith said.

‘They need us as much as we need them.
The big iron ore producers are making hay if you look at their output forecasts.

‘If you’re looking for 트럼프카지노쿠폰 something that’s not dependent on a vaccine, you’d probably firmly put those in that camp.’ 

Technology

While a lot more people are working from home, not all technology stocks were considered to be the best investment.

Mr Smith recommended HUB24, a superannuation trading platform, which has seen its share market surge from $6.40- in March to $21.81 as of Monday.

‘Fund managers, because of all the regulation, and so on, 더킹카지노3만 are looking to outsource funds administration,’ he said.

He was less keen on deferred payment platform Afterpay, even though its share price had surged from $8.90 in March to $97.54 as of Monday.

‘They’ve had a big run. Their valuations are pretty stratospheric and 오바마카지노신규쿠폰 I’m just not sure they’ll be enough to go around,’ Mr Smith said.

‘They can also be subject to disruption: you’ve got PayPal, some of the banks are coming up with no-interest credit cards, so I’d be wary about buying companies like Afterpay.’

Investing

With interest rates at a record-low of 0.25 per cent, the Australian Securities Exchange has proven resilient, with the benchmark S&P/ASX200 bouncing back 37.3 per cent since slumping in March.

The ASX200 on Monday rose 52.60 points, or 0.85 per cent, to 6229.4, the highest level in three months.

Massive COVID-19 stimulus measures are also set to see gross government debt surpass the $1trillion mark in June 2022 for the first time ever.

While Australia is now suffering from deflation, Mr Smith expected the large injection of government funds and possible quantitative easing – where the Reserve Bank buys government and corporate bonds – to cause inflation to climb in years to come, which would be good for the share market.

‘From an investor’s point of view, you don’t get much money in a bank,’ Mr Smith said.

‘Australia is still one of the highest-yielding stock markets in the world.’