David Chu, Head of International Business, recently joined Thomas Sung on the SBS Radio Cantonese Program to discuss the Australian property market from a financial perspective. Listen to the podcast episode in Cantonese or read the transcript of his interview in English below.

English transcript:

Thomas (host): The RBA and the Commonwealth Bank have each issued research reports, showing that the property market is under tremendous pressure due to the pandemic and may face a drop of up to 40% in the future. Is this the case? First, we will have Mr. David Chu, Head of International Business of ShineWing Australia, share with us his analysis of the Australian property market from a financial perspective. In addition, we will have Peter, who works in the real estate industry, share with you his view on the property market from his personal experience.  Let us first hear the thoughts of David.

David: In relation to office buildings, for example, due to the restrictions, many office staff have been working from home. It has been close to half a year since the local onset of COVID-19 in March. Through ongoing practice, many companies seem to have realised that they do not necessarily have to return to the office environment. Therefore, some of them have changed their future requirements for office buildings, or will instead reduce their footprint by working from home. Some even divided their staff into Team A and Team B to take alternating shifts. From this perspective, the demand for office buildings may decrease. There has been some media reporting lately. Two days ago, it was reported in the Australian Financial Review that a property group was buying Grade C and D office buildings and converting them into residential buildings. On the other hand, some investors feel that as soon as the pandemic is over, people’s passion for travelling will resume. These groups anticipate an ongoing demand for hotels. Therefore, in the long run, if the price is reasonable, they will buy Grade C and Grade D office buildings and convert them into hotels.

Thomas: What about residential properties?

David：Yes, due to the pandemic, many residents in apartments cannot go out due to the stay-at-home restrictions. Even if there are gyms, swimming pools and even other facilities in the building, they are also closed. This will undoubtedly affect newlyweds or the elderly, but more so families with small children. If the children can’t go anywhere, they may feel bored and become impatient. At the same time, for some households, the whole family is packed in an apartment. When the parents have meetings or work via Zoom, they also have to help their children with online classes and home schooling, thus affecting each other. Therefore, some families have begun to consider whether to move to a house or a townhouse that provides more space and at least a backyard for their children to move around. If a swimming pool can be afforded, there will be no need to go to a public swimming pool. This at least gives the children a place for activities. Therefore, in this regard, the pandemic has prompted many parents to think about the liveability of apartments. This may change the real estate market.

Thomas: So there is a new trend in the business community along with the property market, right?

David: Some experts mentioned that commercial buildings may be affected, and residential buildings may be changed too. Some experts have noticed that logistics has become very important during the pandemic. Many people shop online. This may increase the demand for warehousing, cargo storage, logistics and transportation services. That is why some experts have said that there may be an increase in demand for industrial buildings and warehouses. At the same time, there is a new trend in the Australian housing market, known as the build-to-rent scheme. Once a residential building is completed, it is not sold but rented. This has become a new trend in the property fund industry. Many funds would invest in apartment buildings, and then lease them out once they are completed, to generate fixed income. This is an emerging trend in the real estate market.

Thomas: Does this deployment show that the financial sector has better expectations for the future recovery of the property market?

David: Opinions vary from one to another. A few factors underpin the Australian real estate market. First, housing demand depends on the intake of immigrants. The population of immigrants has grown in the past ten years. This has largely contributed to the property price rise in big cities such as Sydney and Melbourne. Second, international students. The more the international students, the greater the demand for housing. However, both factors have changed because of the pandemic. There are fewer international students, and the Federal Government has tightened migration policies. It remains unknown what these changes will bring about in respect to housing demands and prices.

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David is attuned to the Asian listed company market, international taxation issues, corporate regulations and various stock exchange requirements and is highly regarded in the market place. Reach out below to discuss how we can support your business during this challenging time.

The post Analysis of the Australian property market from a financial perspective appeared first on SW Accountants & Advisors.

David Chu, Head of International Business, recently joined Thomas Sung (host) on the SBS Radio Cantonese Program to discuss the Federal Government’s new infrastructure plan. Listen to the podcast episode in Cantonese or read the transcript of his interview in English below.

English transcript:

Host: David, we all know that the Prime Minister announced substantial expenditures for a series of new infrastructure projects on Monday. What are these projects? How is the market reacting?

David: In fact, the bushfires and the pandemic have both hit the Australian economy, resulting in a drop in gross national product by 8-10%. Especially during the pandemic, many businesses and shops have ceased operations due to the restrictions. Therefore, the government has come up with many plans for the post-pandemic recovery of the economy, one of which is to create jobs for the people through a number of infrastructure projects.

The Prime Minister mentioned that originally the Federal Government had $1.5 billion worth of infrastructure development initiatives in place, and now they have expanded the scope to allow some smaller projects to commence earlier in Victoria and New South Wales. The major reason is to generate employment, given the Federal Government estimates that the unemployment rate could hit 8% in September. In addition, the JobKeeper payment of $1,500 per fortnight is about to end. In this case, therefore, the government has to start thinking about how to get jobs back for the people.

Host: So what are these projects?

David: They include the construction of reservoirs. The Federal Government hopes to secure water supply by building more reservoirs. Water is important for residents in the urban areas, but it is even more important for agriculture. The Federal Government intends to adopt new measures to ensure water supply. There are also other projects, including communications. Urban residents have better access to the Internet and other means of communications. In rural areas, however, the cost of laying telephone lines is high. They are in dire need of wireless Internet facilities to facilitate communication.

These projects would commence ahead of schedule. In Melbourne, it is expected that the railway between the airport and the city centre will be launched as soon as possible. It is also expected that a rail line will go all the way down to Melbourne from Brisbane. There are also some power supply facilities between Tasmania and Victoria. All these projects will be launched as soon as possible, from which the Federal Government hopes to create about 66,000 new jobs.

Host: As far as I know, this is only the first stage, right? There are more projects, correct?

David: Yes. Of course, large-scale infrastructure projects would require further approval. There are environmental protection issues which contractors have to take care of. Generally, addressing these issues would normally delay the approval by three or four years. This time the approval process is said to be simplified, and it is hoped that the projects will be approved within an average of 21 months, meaning at least two years shorter than the normal timeframe.

The proposed reform will allow projects to be launched earlier. If following the original three-year timeframe, these projects will not be able to contribute as expected. Even if they eventually start, they will not resolve the economic challenges following the end of some relief measures in September.

Host: The Federal Government hopes to launch some short-term large-scale infrastructure projects in a short time, or shorten the approval timeframe for large-scale public facility projects. According to you, this is actually quite urgent, because the stimulus packages introduced by the Federal Government will end in September. Now everyone seems to be worried about it.

David: Yes. In fact, economists have expressed different opinions. Many measures will end in September. For example, the bank allows deferral of mortgage repayment for six months; and landlords allow deferral of rental payment for six months. In the case of debts, the threshold on which creditors may initiate recovery action at the small claims tribunal is raised from $2,000 to $20,000 for six months. In addition, previously, creditors could demand bankruptcy of debtors if the debt amounted to $5,000, which has now been raised to $20,000. All these measures will end in September. Economists have suggested that new measures may be introduced to gradually boost the economy, and the original measures should not be terminated all at once. For example, in terms of debt collection, it is now not allowed to collect debts in six months. The banks’ statistics shows 480,000 home mortgage deferral applications, and more than 210,000 commercial loan payment deferral applications, involving a total amount of $230 billion.

Nonetheless, temporary non-repayment does not mean waiver of repayment. On the other hand, however, the banks are concerned that if the borrower does not repay the loan in the future, it will increase the bank’s bad debts. That being said, some economists say that the government may now have to work with banks to reduce the number of deferrals. For example, a few banks have also said recently that they have begun discussions with their customers on the timetable for repayments. About 10-15% of the NAB customers who applied for such deferrals have already resumed normal repayments; about 4% of the Westpac customers have done so; and about 5% of the ANZ customers have done so. Some experts in asset restructuring and insolvency say that the sooner these resume, the better it will be. It is good to know earlier if a customer cannot service the loan, so that the bank can get prepared; otherwise, they will have to deal with a sudden surge of borrowers failing to repay their debts in September, just like a landslide, which will impact the entire financial industry.

Host: The general understanding is that the bank is the mother of all other industries. If the banks are not doing well, it will affect not only the bank itself but also the entire financial sector.

David: Yes. There is more than that. Some experts also advise companies that were working well to be cautious, because if a customer applies for a trade credit, if the customer cannot service the debt, the lender will be affected, unable to recover what has been lent. Experts remind that even a well-functioning company should be cautious when extending credit. If any credit is extended in these couple of months, and the customer is unable to repay, the company’s cash flow will be impacted. The general public certainly likes to have peace of mind.

Host: Given the situation, the Federal Government is also expected to introduce some new measures to deal with the end of certain aid policies in September – to continue these policies or to introduce replacement policies, so that the economy will stay on track.

David: Right. We all know that the government is working hard on viable plans from various aspects to restart the economy.

Host: Okay, we are very grateful to Mr. David Chu, Head of International Business of ShineWing Australia, for sharing with us how the market has reacted to the Federal Government’s latest infrastructure plan. Thank you very much.

David: Thank you Thomas! Thanks everybody.

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David is attuned to the Asian listed company market, international taxation issues, corporate regulations and various stock exchange requirements and is highly regarded in the market place. Reach out below to discuss how we can support your business during this challenging time.

The post The Federal Government’s infrastructure plan to boost employment appeared first on SW Accountants & Advisors.

David Chu, Head of International Business, recently joined Thomas Sung (host) on the SBS Radio Cantonese Program to discuss the Reserve Bank of Australia’s diagnosis of the Australian economy as well as the problems arising from the lifting of Hong Kong’s preferential tariff status by the United States. Listen to the podcast episode in Cantonese or read the transcript of his interview in English below.

English transcript:

Host: David, the Reserve Bank decided to keep the interest rate unchanged. Everyone knows this will happen, but what else did they say?

David: Before the meeting, economic experts had known that the RBA would keep the interest rate unchanged, because the RBA had said more than once that 0.25% was already the lowest they could afford. Unless something drastic happens, their decision will not change. So, economic experts have in turn switched their attention to what the RBA has said. When the Governor of the RBA announced his decision to keep the interest rate unchanged yesterday, he mentioned a few points. Firstly, the current Australian economy is indeed in a difficult period; secondly, the upside is that the consequences of the economic downturn may not be as bad as they initially expected; and thirdly, 600,000 people were being laid off in April, a large part of whom had their working hours reduced to zero. Household consumption is also quite weak, with many investment plans cancelled or postponed. However, they noted improvements in working hours in May, but overall the outlook remains very uncertain. They said the most important is how much confidence the general public has in the prospect at this current difficult time, which will have a direct impact on how well the Australian economy will recover in the future and how long such a recovery will take. Therefore, the RBA said they will make every effort to facilitate employment, improve personal finance and promote business finances, including maintaining low interest costs and sufficient market liquidity.

Host: In fact, the Reserve Bank has mentioned confidence more than once. There is virtually not much they can do. It is difficult to improve the economy through monetary policies.

David: They also mentioned before that by lowering the interest rate to 0.25%, they have almost exhausted their available measures. If the rate cannot be cut further, it would require quantitative easing and fiscal policies. The government may stimulate employment through tax reforms.

Host: I am aware that on Tuesday, Roy Morgan also published an Australian Consumer Confidence report. What does it say specifically?

David: Yes, Roy Morgan conducts a consumer confidence survey every week. They said last week’s consumer confidence index rose to 98.3%, an increase of about 5%, marking the 9^th straight week of increase. That means this index has rebounded and been rising for nine consecutive weeks since the sharp fall at the onset of the pandemic. Among the people they interviewed, 24% said their financial situation this year is better than last year; but 36% of the respondents said their financial situation is worse than a year ago. They also asked about the interviewees’ thoughts about the future, with 38% saying that they expect their economic conditions to be better at the same time next year; and 17% saying it will be worse than now. It seems the public’s confidence in consumption is gradually improving. It is now clear that after the government spent $200 billion, the situation seems to have improved slightly.

Host: We can see that many states in Australia are reopening. In fact, the economic atmosphere and economic activities have also increased significantly. I know you are currently in Hong Kong, so I wish to ask you some questions regarding Hong Kong now facing the lifting of its preferential tariff status by the United States. Now a week has passed, has everything been settled? What is the sentiment of the business community?

David: When Hong Kong announced the national security law at the time, a bit of shock followed in the market, and now the public is also waiting to see what the legislation will look like. Some people said that in fact, many developed countries in the world have similar national security laws. It is nothing special for Hong Kong to have one as a special administrative region of China. Of course, there are also people worrying about how this law will be implemented. Do they have confidence with this law? There is worry at this stage. The business community said that national security law will secure peace for the market so that everyone can conduct their business, which is not bad. Let us recall that it has been almost one year since last June, from social unrest to the pandemic. It has become very difficult to do business in Hong Kong. So, how much can the public can tolerate this? No one knows. To be frank, no one wants turmoil.

Host: An incidental issue is that there has been a recent rumour about Hong Kong dollars being decoupled from US dollars. The Hong Kong dollar has twice been targeted and attacked by foreign funds, but neither attack succeeded. Does this actually reflect the strong status of the Hong Kong dollar?

David: Yes, in fact the linking of the Hong Kong dollar to the US dollar does not require the approval of the US government. Everyone knows this now. Nonetheless, it remains unknown whether the US government will create a lot of trouble for Hong Kong. You see that in the current Sino-US controversies, from the trade war to the technology war, many economic experts also commented that a financial war is inevitable. As part of such a financial war, will the United States make trouble in Hong Kong, as the financial centre of China? This may have also been expected. For example, the Hong Kong Economic Journal quoted a BNP Paribas report that from 2010-2018, 73% of the overseas fund-raising of Chinese companies was done through Hong Kong, and 60% of bond issuance was done through Hong Kong. Therefore, Hong Kong holds a very important position to China. Earlier, you mentioned that foreign funds had twice failed in attempts to hit the Hong Kong dollar, and the reason lies in the mechanism of the link between the Hong Kong dollar and the US dollar. In other words, whenever someone from outside of Hong Kong exchanges US dollars for Hong Kong dollars, the Hong Kong government always meets the exchange. In turn, if you bring in Hong Kong dollars, the Hong Kong government can also exchange them for US dollars. The policy of the Hong Kong government is that every single Hong Kong dollar circulated is backed up by the corresponding US dollar. Technically, if you want to wrestle the Hong Kong dollar to the floor, you have to keep buying US dollars and selling Hong Kong dollars. The challenge will be a matter of whether Hong Kong actually has enough US dollars to cope with matching every single corresponding US dollar, unless you have other channels to secure sufficient Hong Kong dollars. Therefore, although foreign funds have twice attempted to short sell Hong Kong dollars, the Hong Kong government understands how much Hong Kong dollars are circulating in the market. The only option left for foreign funds is to borrow Hong Kong dollars for exchange settlement. Therefore, in the last two attacks, the HKMA raised the interest in borrowing Hong Kong dollars to 10-20%, resulting in the foreign funds spending a lot of money simply paying the interest. Their attacks were in vain. Therefore, the Hong Kong dollar should be relatively stable. However, if you want to start trouble, there is always a way. Since many companies do business or financing in US dollars, it will be another story as to whether there will be sufficient US dollars when repayment comes due. The Hong Kong government also signed an arrangement with the Chinese government some time ago, to ensure that if the Hong Kong government runs out of US dollars, the Chinese government will lend their US dollars to the Hong Kong government for settlement.

Host: Then we have to see if this financial war will really break out. It seems that everyone is now trying to find out about it. Okay, big thanks to Mr. David Chu, Head of International Business of ShineWing Australia, for his analysis of the RBA’s diagnosis of the Australian economy and the problems arising from the lifting of Hong Kong’s preferential tariff status by the United States. Thank you!

David: Thank you Thomas! Thanks everybody!

Get in touch

David is attuned to the Asian listed company market, international taxation issues, corporate regulations and various stock exchange requirements and is highly regarded in the market place. Reach out below to discuss how we can support your business during this challenging time.

The post Economic insights: Australia, Hong Kong and the U.S. appeared first on SW Accountants & Advisors.

David Chu, Head of International Business, recently joined Thomas Sung (host) on the SBS Radio Cantonese Program to discuss the current state of the Australian economy and what it’s future may look like. Listen to the podcast episode in Cantonese or read the transcript of his interview in English below.

English transcript:

Host: On Tuesday, both the Chairman of RBA and the Minister for Finance separately issued statements to the public on Australia’s financial policies. What exactly was said in the statements? How do they  feel about Australia’s economy? What is the reaction of the financial community? To answer these questions, we once again welcome Mr. David Chu, Head of International Business of ShineWing Australia, to share his analysis.

David: The RBA will keep the interest rate unchanged at 0.25%. In fact, this is within everyone’s expectations. Economic experts said that the change in interest has been determined, but the most important thing is to hear what the RBA Chairman says in his speech.

Host: So what exactly is disclosed?

David: Yes, the RBA Chairman was ‘cautiously optimistic’ in his statement. Economic experts also found that the Chairman was calmer this time than on the last two occasions. It seems that he also feels that the impact of the pandemic on the Australian economy has been alleviated, so their conclusion is that the Chairman believes the impact of the pandemic on Australia has almost reached its peak.

Host: This is a good thing. If the Reserve Bank does not add  more measures, it would mean that the current monetary policy is functioning.

David: You can say that again. At the same time, however, economic experts say that the RBA has almost exhausted its ammunitions, and the interest rate has fallen to such a low level of 0.25%, which is already right down the bottom. Australia and Europe are in different environments and it is impossible for the interest rate to go to negative figures in Australia. Therefore, the interest rate, as a tool, at 0.25% has already reached its limit. The Chairman also mentioned that they have another set of measures, which is quantitative easing.

Host: That is buying bonds.

David: The question is what kind of bonds to buy? Bonds also have credit ratings.

Host: Yes, yes.

David: In the past, if the RBA wanted to buy bonds, they could only buy A1 rating bonds for short-term ones, and now they can buy A3 rating bonds, which is a category of lower quality and higher risk. In the case of long-term bonds, the RBA would only buy the AAA rating bonds in the past, but now they have lowered it to BBB rating bonds. That  means, if further quantitative easing measures are used, the RBA will be willing to buy some lower-quality bonds to increase liquidity. This is not a bad thing, but after all it is hoped that liquidity can be maintained without buying that much.

Host: Many people say that in buying these bonds, the RBA is in fact helping some companies. Since in a very volatile situation, many people will sell their bonds, regardless of their grades, for cashing out. If your bond itself is rated low, plus in a very volatile situation, no one is willing to take over, and then there could be a crash, and once the crash happens the company may collapse. Is the RBA now trying to help these companies?

David: In fact, the RBA’s action this time is mainly to help some financial institutions, because these financial institutions and investors are the main buyers of the bonds issued by companies. If the financial institutions have got these bonds which have a lower liquidity, they cannot dispose them without a big loss. If the RBA buys them that will allow these financial institutions to get some liquidity back for further lending. That’s why it is mainly to help some financial institutions. As to what kinds of bonds they are (like you just asked), we would recall that the 2008 Financial Crisis was caused largely by some junk bonds collapse. Whoever was holding those bonds was in trouble. That led to a lot of financial losses in the market in that situation.

Host: Due to time constraints, let’s change the topic. The Treasurer attended a national press conference on Tuesday. The picture he portrayed for the Australian economy was pretty bad, right?

David: The Treasurer estimates that the unemployment rate will reach 10%. The figure released by the Australian Bureau of Statistics last time was only 5.2%, mainly because that 5.2% was based on statistics in early March. Now it will reach 10%. He said that if we did not have our own stimulus package in Australia and had instead followed Europe, our unemployment rate would have risen to 17%. Take this as giving credit to himself. However, others from the financial sector, such as ANZ Bank, believe that the unemployment rate may actually rise to 12-13%. As for the government’s stimulus packages, a total of $320 billion has been used, equivalent to 10% of GDP. Without these measures, if the economy would have continued to slump and Australia would have suffered $4 billion economic loss per week. Therefore, the Treasurer said that through these economic stimulus packages, Australia is managing to stabilise its economy, with the hope of a rebound after the pandemic. Let’s see how the situation will evolve. Economic experts have already begun to say that the pandemic is close to an end, and it is time to think about how to make the economy start again.

Host: Did the Treasurer say that once the economy starts again, what preparations we should make now, such as some forward-looking policy deployment?

David: They said there might be some measures coming out. Many economic experts have proposed many different strategies. It is like, for example, when a car does not start due to a faulty battery and you want to make it start again. You need to jump start it by connecting a cable to another battery. What are the specific measures or methods in consideration? In general, economic experts say that there are three most important points.

First is that there must be some measures to help SMEs, because SMEs are almost the driving force of the Australian economy. If they cannot start again, there will be an impact on the entire economy, especially employment. In terms of SMEs, the most important thing is to target the hardest hit industries, i.e., tourism, leisure, retail, restaurants, etc., to help them start again and hire new employees.

Second is that, as some economic experts suggest, to allow international students or foreigners holding short-term working visas to return as soon as possible. That is because, due to the pandemic, 300,000 people on short-term visas have now left Australia. If you think about the total population of Australia that is only 25 million, 300,000 comprise a relatively significant group. Some experts say that we may need to allow these people to return as soon as possible. In the first place, they will create consumption in Australia; second, we need to generate export income provided by foreign students for Australia. It amounts to tens of billions of dollars.

The third is, as some economic experts suggest, to take this opportunity to change the tax system. Despite so many investigations on tax reform, no substantial changes have been made. They also mentioned that, for example, when buying a house, we need to pay stamp duty. This stamp duty actually goes into the state government’s treasury, but economic experts suggested that the every dollar of stamp duty may have an adverse effect equivalent to eighty cents on the gross national product.

Another thing is the Australian corporate income tax. The corporate income tax rate is now 25%. Economic experts also say that every dollar of corporate income tax going to treasury will have a fifty-cent impact on the economy. So do these types of taxes, which have a greater impact on the economy, require some sort of reform? In their view, it is certainly impossible to simply cut taxes. After all, the government needs money to spend. They may consider starting with changes in GST, because this tax is only paid when something is bought. In this way, the reduction in stamp duty and corporate income tax can be compensated by an increase in GST. This provides more encouragement for people to engage. By making more money and paying less income taxes, they increase their after-tax income. If the local government receives less money from one source, it will make up for it from other sources. So there are different approaches, depending on what measures the government will take to get Australia’s economy back on track as soon as possible.

Host: Yes. David, you are a professional accountant. A lot of people are discussing one thing. Even when Australia is in a good economic condition, the reporting regulations, tax arrangements and accounting requirements are quite burdensome, making some companies spend a lot of money in compliance. What is your opinion on this?

David: Yes, the tax system in Australia is really complicated. The more the tax regulations, the higher the compliance reporting requirements. This has caused the public to spend a lot of energy and money on tax compliance. Therefore, business groups say they hope that the tax system can be simplified, so that the general public can save their energy for more constructive activities, such as doing more business or even spending time with their families. This is a good thing.

Host: Yes, yes. Big thanks to Mr. David Chu, Head of International Business of ShineWing Australia, for sharing with us his opinions on the Australian economy and the statements made by RBA and the Treasurer issued on Tuesday, as well as the forward-looking views of the financial community. Thank you!

David: Thank you Thomas! Thanks everybody.

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David is attuned to the Asian listed company market, international taxation issues, corporate regulations and various stock exchange requirements and is highly regarded in the market place. Reach out below to discuss how we can support your business during this challenging time.

The post What can we expect from the Australian economy? appeared first on SW Accountants & Advisors.

David Chu, Head of International Business, recently joined Thomas Sung (host) on the SBS Radio Cantonese Program to discuss the current state of the property market in Australia following reports of an expected fall of up to 32%. Listen to the podcast episode in Cantonese or read the transcript of his interview in English below.

English transcript:

Host: After looking at the global securities market, let’s get back to the situation in Australia. The Commonwealth Bank said in its recent announcement that Australia’s property market may fall up to 32%. The news gave many a terrible fright on its release. Later, many analysts stepped out to provide their analyses with the belief that the Commonwealth Bank’s forecast seemed too conservative. What is the situation? We have David Chu, Head of International Business of ShineWing Australia, here today to share his opinions.

David: When the Commonwealth Bank mentioned real estate in the release of their annual results, they estimated that it will fall by 32%.  But if you look closely, you will find that they were mentioning 32% from March 2020 to March 2023. That is, it will fall by 32% in three years, not 32% in one year. It is definitely startling if you just see the headline.

Host: On what basis did they make such a guess?

David: They said if the pandemic led to the economic recession and the recession continues for a long time, that is what will happen. Nevertheless, be careful while listening, the expression they used is “prolonged crisis”, which was referring to what it will be like if the current situation continues. Their point of view is assuming the economic growth these several years, for example, in 2020 to be -6%, then an increase of 6% in 2021, with the unemployment rate of 8.25% in 2020, which will stay at 8% in 2023. They said if that is the case, the property market will fall by 32%. Some economic experts commented that this might be “the worst case scenario”.

Host: In that context, what would be a more balanced estimate? How will the property market develop? Will there be support?

David: Of course there are other economic experts who agreed that the Commonwealth Bank’s plan should be the worst case scenario. Some economic experts estimate the economic growth in 2020 to be a bit worse, -7.1%, but in 2021 it may come back with a rise of 0.3%. The unemployment rate will be 9% in 2020, 8.5% in 2021, and for 2022 and 2023 depending on how things evolve. With this in mind, home prices may only fall by 11% from 2020 to 2023. Some experts also said that as an investment tool, buying a home and leasing it out for rent is not really that bad, which gives at least 3-4% return, better than putting the money in the bank, which yields at most 1% interest. After all, the RBA interest rate is only 0.25%. Relatively speaking, the return on real estate investment should be good enough to support home prices, so some economic experts have a more optimistic view. Nonetheless, experts do agree that housing prices will fall, and it is just about how much it falls by.

Host: I know that experts have different opinions on home prices. What do they say?

David: Some experts believe that if the pandemic caused the economic recession, and if growth can be resumed as soon as possible, home prices should not fall by as much as 30% in three years. Experts from some other Big 4 banks said that only a 10% drop on average might take place over the next 12 months. UBS’s estimate is a drop by 10-20%, and Morgan Stanley believes it will drop by about 15%. AMP Capital is relatively pessimistic, saying that it may drop by 25%. Of course, these are all estimates by various institutions at such an early stage. As for whether it will fall by 32% in three years, this is of course based on some of the more conservative assumptions just mentioned.

Host: So during this pandemic, I know that some tenants have found themselves in difficulties. One report said that close to 10% of the tenants across the country asked landlords to reduce rents. I know that rent reduction has been voiced and demanded overseas, such as Hong Kong. I heard someone has made it happen. Is this common in Australia?

David: In fact, this is quite common in Australia, and it may have even been requested by more people in Australia than in Hong Kong. The main reason is the introduction of some regulations in Australia. Firstly, landlords of both residential and commercial buildings can’t evict tenants for these six months, because if you lose your job, it is naturally difficult to repay your mortgage and rent. On the payment of rent, some leases clearly stipulate that after two or three months of default in rent payment, the landlord can request termination of the lease and demand vacation of the property. The same is true for commercial properties. Therefore, the government issued a rule that tenants should not be evicted for six months. Second, if you have difficulty repaying your mortgage, you can also apply to the bank for deferring your repayment. On loans, the Commonwealth Bank also mentioned in their release of annual results last time that they received 140,000 applications on home mortgages and 70,000 applications on commercial loans. On personal loans, like credit cards, the Commonwealth Bank received 25,000 applications. The general public has also made requests to reduce their burden. Some of my friends lease out their shops and tenants are asking them for rent reductions. It depends on how their negotiations with the owners go. Some just don’t want to waste a large amount of time negotiating and go ahead to halve the rent; some say that the rent can be reduced, but in exchange for an extended lease, so that the loss will not be significant. So everyone deals with it their own way. Getting back to your question whether this is common, it is indeed more common in Australia than in other countries, and the situation may be much better than that of the United States.

Host: We also expect these measures to give some relief to the tenants who are now hit by the pandemic. We are very grateful to Mr. David Chu, Head of International Business of ShineWing Australia, for taking the time out of his busy schedule to share with us his analysis of whether proper prices in Australia will fall by 32% under this pandemic. Thank you!

David: Thank you Thomas! Thanks everybody.

Get in touch

David is attuned to the Asian listed company market, international taxation issues, corporate regulations and various stock exchange requirements and is highly regarded in the market place. Reach out below to discuss how we can support your business during this challenging time.

The post The impact of COVID-19 on Australia’s property market appeared first on SW Accountants & Advisors.

David Chu, Head of International Business, recently joined Thomas Sung (host) on the SBS Radio Cantonese Program to discuss the financials measures that both the Australian and Chinese governments have released in response to COVID-19 and analyse the potential opportunities these measures might bring. Listen to the podcast episode in Cantonese or read the transcript of his interview in English below.

English transcript:

Host: We know that the whole world is introducing a wide range of financial measures to save the market, whether it is Hong Kong, China or Australia. Our focus being placed on China and Australia. Actually the two countries are taking different financial actions. Is there any room for new business opportunities to be created? To answer this question, we have David Chu, Head of International Business of ShineWing Australia here today to share with us his analysis. Hi David!

David: Hi Thomas! Hi everybody!

Host: David, as we know, Australia and China have each introduced some financial measures to save the market. Now everyone is talking about one issue – whether any business opportunities have been created in this situation. Please share your thoughts with us.

David: Correct. The Chinese term for “crisis” – Ngai Gei, implies both danger (Ngai) and opportunities (Gei). This pandemic creates a difficult situation that companies may need to address. At the international level, close to 60% of the countries have shut down their borders, keeping all visitors out. Travelling is a big hassle. Trading has been affected a bit, and investment has to be put aside at this stage.

Host: However, it is not until recently that China has returned to work. To what extent has work resumed?

David: A company called China AMC issued a report, showing that the overall resumption of work has reached 89% in China. For listed companies this figure is close to 100%. For SMEs and privately held businesses, the percentage would undoubtedly be a bit lower. However, work has resumed to varying forms. Some have fully resumed working in office, some require employees to work from home, and some are working with flexible hours, in order to avoid forming clusters during the peak hours of commuting. It also varies between industries, such as manufacturing, where in some places workers aren’t able to go to work due to access issues. In some others, such as the service industry, consulting work can be done remotely. However, this may not work for the catering industry.

Nonetheless, the industries are gradually recovering. China has employed many indicators to measure work resumption, including the volume of coal use, passenger load in public transport, people travelling by air, road and railway and foot traffic in malls; all indicative of work resumption. It can also be substantially demonstrated by parcel delivery, internet usage, power usage and many other aspects. A report has recently been released in Shanghai based on electricity consumption where close to 85% of office work has resumed; roughly 70-80% in the medical sector (since some medical workers are deployed to fight the pandemic); 85% in shopping malls; a smaller 60-70 % in hospitality and catering, where there is still some challenges; and 80-85% in commercial buildings, i.e., an uptick in power usage in office buildings. This shows recovery is underway.

Host: What about logistics and supply chains?

David: Since the Chinese government wishes to stabilise its domestic economy, and therefore pays particular attention to logistics and supply chains, they will take whatever measures necessary to keep the supply chain unhindered. For example, now all highways, including tollways, are free. It is expected that this measure will continue until the end of June, in an attempt to support the transport of cargos. On carrying capacity arrangements, anything related to medical and pandemic control equipment such as masks, preventive clothing and sanitisers – among others – will be given priority for transportation.

Host: We understand that Australia and China have introduced their own respective financial measures, and the current business environment is different from the past. Given the mutual dependence and reliance at this stage, have any new business opportunities been created?

David: As I said, “crisis” implies both “danger” and “opportunities”. There are naturally new business opportunities. A lot of restaurants are affected in eat-in terms, but have more take-away business, which has increased by 20% to 40%. This has greatly increased the use of containers, such as plastic boxes and styrofoam boxes. These are not environmental friendly. So if Australian companies are able to provide environmental technology, they will have a great opportunity in single-use disposable food containers. Next is online shopping.

The shutdowns and social distancing required in many locations have encouraged people to shop more online, resulting in an increase in online shopping volume. What opportunities does this bring to Australian? If Australian companies are able to take advantage of this momentum in the way of shopping and promote their products to the Chinese market, they will have a great number of opportunities. There are over 1.4 billion mobile phones in China now, which means there are many people shopping over the phone. However, Australian companies have still needed to consider which platform to use, and which KOLs (key opinion leaders) to choose, to help them. Even if you manage to sell a product, how will you deliver it? This will require logistics and storage arrangements, and after-sales services. These, of course, need to be considered. Since lifestyle or the way of shopping has changed, Australian companies are given new opportunities.

Thirdly, online shopping has, in turn, bridged the gap between countries. While talking about selling our products to China, have we thought of the other way around? That Australian companies can help some Chinese brands in entering into Australia? This is also an opportunity. China is manufacturing a lot of products for different foreign brands. For example, if we go to the supermarket, we will find Made-in-China products on all shelves. By Made-in-China, however, it usually means OEM, where the foreign company provides their design and specifications for the Chinese manufacturer to make, assemble and affix the foreign label to the finished product. Actually, Chinese entities are able to independently manufacture some products, such as food and fashion. We may consider whether some Chinese products can be made to Western flavours, which, in fact, is feasible. The Australians of course have Australian flavours, seasoning and herbs. Is it possible for some of the herbs and spices to be made in China, and then exported with a Chinese brand? This is virtually achievable in China, but of course we need to ensure food quality, hygiene and safety. If the same level of safety and quality is achieved, why not use their own brands to market in Australia? Take garments and fashions for example. Many branded products are made in China. Is China able to design garments by themselves catered for the Western taste? China actually has the capability to do these kinds of designs now, but has not made them for the global market.

Host: With so many opportunities before us, is there any hindrance?

David: This will depend on when the traffic ban will be completely lifted. No one knows at this stage. Business dealings always require interpersonal communications and delivery of goods. On interpersonal communications, if people cannot sit down together and talk face-to-face, the communication will be less effective. By my own observations over the last few months, I have found that online conferencing software is able to handle 50% of the work, but the remaining 50% really needs face-to-face discussions. On the other hand, if borders are not reopened, cargos may not arrive on time. I heard that the recent cut in air traffic – such as the cut on Hong Kong-Melbourne and Hong Kong-Sydney flights to just one per day – has resulted in many cargos (which would have otherwise been carried by these passenger flights) could not be delivered in time. Even for the few that were shipped out – as I understand from my discussions with a few logistics operators – were charged 3-4 times higher than before the pandemic.

Host: This has inevitably raised the cost.

David: Yes. This has made export less desirable in some cases.

Host: Right. Then all we can do is wait until the pandemic passes. Big thanks to Mr David Chu Head of International Business of ShineWing Australia who is currently on a business trip in Hong Kong, for sharing with us the resumption of work in China as well as the trade relationship between Australia and China. Thank you!

David: Thank you Thomas! Thanks everybody!

Get in touch

David is attuned to the Asian listed company market, international taxation issues, corporate regulations and various stock exchange requirements and is highly regarded in the market place. Reach out below to discuss how we can support your business during this challenging time.

The post Opportunities between Australia and China in the midst of the pandemic appeared first on SW Accountants & Advisors.

The epicentre of what is now a global pandemic has shifted to Europe, it could potentially shift again to the US, and the global economy continues to reel from the impact of countries all over the world imposing varying degrees of a lockdown.

China implemented drastic measures and the largest quarantine in human history, and less than two months after taking effect, signs of a recovery have begun to appear. By one estimate, over 90% of Chinese factories and enterprises have now resumed work and production, so it is hoped that this will lead to global supply chains reliant on Chinese inputs progressively returning to normal from this point.  This has also led some to ask whether the power of the Chinese consumer could put a floor under the global economy.

In Hubei province, where Wuhan is the capital city, months of quarantine measures will be removed this week, and authorities will allow factories to resume and interprovincial travel to take place. In Wuhan itself, controls on outbound traffic will be lifted by 8 April, virus-free neighbourhoods will come out of quarantine and public transport will resume.

Daily coal consumption at major power generation plants throughout China reached 616,700 t/d yesterday, the highest in two months and over two-thirds of normal usage this time last year. Here in Shanghai, along with other major cities, it’s almost beginning to feel like business as usual. Many people are back in the office, restaurants and shops have customers, businesses are trading, and Apple is reopening its retail stores. Even peak hour traffic has returned.

Previously, Shanghai, along with local governments around the country, mandated wearing masks in public and issued the highest level health alert. But the National Health Commission recently revised policy regarding masks, and the municipal government has downgraded the health alert from level one (highest) to level two.

The mainland’s two stock exchanges, Shanghai and Shenzhen, managed to avoid the panic that led to breathtaking drops in global stock markets around the world. Buoyed by the government’s response and increasingly confident that China has controlled the virus, the Shanghai composite is only down 12.8% YoY, the Shenzhen composite down a mere 7.1% YoY, and both edging back up. Mainland investors continue to rally and keenly await further signs of recovery, such as the government announcing its “Two Sessions”, the annual plenary meetings for lawmakers and politicians.

But as signs of recovery gradually manifest, data from the National Bureau of Statistics illustrates the economic devastation caused by COVID-19. Key indicators dropped by double-digit percentages in Q1/20, with retail sales down 20.5% YoY, fixed-asset investment down 24.5%, government infrastructure investment down 30.3%, and real estate investment down 16.3%. And just as China’s workers and businesses are coming back online, major trading partners are shutting down, prompting some to further revise growth forecasts in light of weakening demand for exports.

Yet it is worth remembering these numbers are not indicative of structurally weak demand. The average family that was planning to buy new clothes, a car and a house, has deferred these purchases because of a lockdown. Ten years ago, a sharp decline in global demand for exports was catastrophic. But net exports (value of exports minus the value of imports) over the last several years have contributed roughly zero to China’s GDP growth, and consumption now accounts for almost 60% of the economy.

The more pressing issue for China in terms of weak global demand is unemployment. The application of force majeure clauses in contracts, and the sheer volume of orders being cancelled, have dealt a heavy blow to factories. On this front, subsidies, tax relief, exemptions for rent and insurance, along with reimbursement for unemployment, were among the first measures taken by the authorities. More importantly, the central government recently announced new monetary easing policies, along with special treasury bonds for local governments to fund infrastructure projects. And there’s still plenty of fuel left in the tank for further economic stimulus down the track.

Certainly, consumer confidence is returning slowly, and recovery is predicated on China continuing to control the virus. Imported cases are a daily problem that continue to bring the risk of a second wave. But China’s progress containing the virus has bought time to learn and adapt, and so far, at least in Shanghai, it’s back to business for now.

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David Chu, Head of International Business, recently joined Thomas Sung (host) on the SBS Radio Cantonese Program to discuss the challenge of the pandemic on the future of the Australian economy. Listen to the podcast episode in Cantonese or read the transcript of his interview in English below.

English transcript:

Host: After my brief on the international securities market, we will put our focus back onto the Australian economy. We are seeing the S&P/ASX 200 lingering on the brink. To date, how much is this pandemic affecting the Australian economy? Today we have David Chu, Head of International Business of ShineWing Australia to share with us his analysis.

David Chu: It is correct that the government has introduced some measures to save the market. The whole package costs about $18 billion, of which more than $6 billion is provided as aid to SMEs, each receiving up to $25,000. In addition, $700 million in aid will be provided to companies if they  satisfy certain  requirements. If they buy more equipment, they will immediately receive 100% depreciation deduction  as expenses for the year. A company can benefit  up to $150,000 or so. For the elderly and some government assistance recipients, they may receive an allowance of about $750. This package is intended to relieve  the difficult situations of low income earners, who are living a tough life due to the economic slowdown caused by COVID-19. Also this may encourage some companies to invest  in  new equipment, which will help with production.

Host: Then what are the reactions?

David: Of course nothing is absolutely good or bad. At least having assistance is better than having none. This is point  one. Point  two, some experts said this package seems to have come too late. Point  three, some experts said this package may not necessarily address the immediate need of the present.

Host: What does the present immediate need refer to?

David: A recent report indicates that there are always some receivables in the accounts of SMES, and according to statistics these receivables have amounted to around 776 billion. A typical SME now has around 30% of revenue locked up  in receivables. If liquidity is insufficient in the market, their operations will be affected. For example, if some companies are earning less revenue but still have to pay employee salary without any rental cut, there might be  a chance to  cut staff and even wind up? The recent two years have seen the retail industry, particularly the garments sectors, having a lot of businesses being  wound up due to rental pressure t of reduced turnover. Some larger restaurant businesses  have come across similar  situation. That being spoken, some experts said the most important for the present is to help these businesses secure financing, to get through the cash flow difficulties.

Host: Right. We can also see the RBA trying to help more with financing channels recently in line with the global situation. The issue is, however, that banks sometimes are concerned with  repayment of the loans; therefore, they have become rather cautious  in processing loans. They may not necessarily lend to those businesses with problems or in the face of difficulties. If so, the package may not be virtually helpful to them. Is this the case?

David: Yes. If you are the bank, you will naturally be concerned  about whether the money will be recovered. Even if you have money now and are in a position to lend, will you just grant  loans to help some SMEs? From the commercial perspective of the bank, they may not have that much money. In that regard, the government needs to work harder on how to encourage banks to lend more money to the SMEs. The government may need to spend more time working this out.

Host: Yes. According to some other reporting, the upcoming budget in May might include a stimulus package from the government for the second round. Now, however, it is more words than actions. I understand Roy Morgan has produced a research report trying to diagnose the current economy of Australia. What is that like?

David: Right. This report, published in mid March,  mentions the impact of COVID-19 on Australia.  They interviewed more than one thousand Australian companies for this report, with an observation that around 60% of the business have been impacted by the COVID-19 in the past few months. Annualized there could be 70%. The sectors that  impacted most are, of course, manufacturing, wholesale and SMEs. In state terms, the more affected  are NSW, Victoria and South Australia. No one could  manage to escape. It is a matter of degree.

Host: Sounds like there is little prospect, is it?

David: As we can all see, this is not just about Australia, but about the whole world. Australia will definitely be affected, and of course the travel and aviation industries will naturally be more greatly impacted. City and borders shutdowns have resulted in less people traveling by air . The aviation industry is under greater pressure , suffering a decline of 90%. The lack of foreign tourists has also impacted the food and beverage industry. Another thing is about the manufacturing industry,  as raw materials and parts might not be available. Even if China has resumed production now, from the recommencement of production to the completion of products, and to the delivery of products to Australia, it takes time. In manufacturing, a machine just will not work  if a couple parts are not in place.

Host: In the face of so many issues, it seems the RBA will inevitably decide to cut interest rate in the upcoming routine interest review session. Now the point is how much they will cut by, right?

David: Yes. Most economists  will be looking at  a rate cut in March.  It will be at least cut to 0.25%, from the present 0.5%. This is pretty mcuch the expectation. , as  the Federate Reserve in the States made a sudden rate cut almost to zero. New Zealand also effected a big  cut from 1% to 0.25%. The Australian interest rate, as compared to other economies, such as the USA, New Zealand and even Europe, is high.  This  could  push up the Australian Dollar, which,  as discussed in the last interview, may impact export. The RBA does not like  to see this.

Host: The interest rate of Australian Dollar is actually not high, but the issue is ours is higher than others, which is adverse to export.

David: Correct. The audient might have noticed negative interest rates in a lot of European countries. That means you no longer receive interest by putting deposits in the bank, but instead  pay charges to the bank.

Host: Right. Ok. Let us what the final decision of RBA will be. I know it will be more than this. There will also be some quantitative easing measures.

David: Yes. The RBA has also mentioned that if the interest rate is cut to 0.25%, they will launch some quantitative easing measures for the purposes of releasing money into the market, increase market liquidity, with the hope of recovering the economy and alleviating the people’s hardship.

Host: That’s right. All we can do may be just to see how things will go, since now we are in the midst of uncertainties. Alright. Big thanks to Mr. David Chu, Head of International Business of ShineWing Australia for sharing with us his analysis of the current Australian economic condition, including quantitative easing. Thank you.

David: Thank you. Thanks everybody.

Get in touch

David is attuned to the Asian listed company market, international taxation issues, corporate regulations and various stock exchange requirements and is highly regarded in the market place. Reach out below to discuss how we can support your business during this challenging time.

The post How will the pandemic challenge the future of the Australian economy appeared first on SW Accountants & Advisors.

David Chu, Head of International Business, recently sat down with Thomas Sung (host) on the SBS Radio Cantonese Program to discuss the expected impact of coronavirus on the Australian economy. Listen to the podcast episode in Cantonese or read the transcript of his interview in English below.

English transcript:

Host: David, as we can see, this novel coronavirus pneumonia breaks in in full fury. More and more data are showing that its impact on the Australian economy is even stronger than SARS. Even the Treasurer said so. Then what is the initial assessment by the business community at this stage?

David Chu: Correct. Of course this novel coronavirus has a great impact on China. At the same time, many economists have started to find out its impact on the world economy. There are a few types of views in Australia. It seems that this coronavirus pneumonia tends to have a greater impact on Australia than SARS did, which broke out in 2003, about 17 years ago.

There are a few key factors. First is the current status of Australia, as compared to what it was 17 years back, involves a different level of connection to China’s economy. The then entire economic system of China is no more than one third of what it is today. Therefore, whatever changes in the economic growth of China, even just 1%, may have a more significant effect on Australia, which relies more on China than before.

For example, the three types of export products of Australia are largely related to China. First is iron ore. Prior to the emergence of this virus in China, iron ore accounted for the biggest portion of Australian exports to China. Overall, for China, if, because, now there is city lockdown, manufacturing has been affected, and a great number of infrastructure projects have been stopped. This of course results in a reduced demand for raw materials from Australia. No one knows how much is reduced. According to some recent media reporting, China has introduced some special contractual terms whereby certain contracts can be cancelled in the event of unexpected circumstances.

Host: Then this may hit Australian exports such as resources and mineral as well as oil and gas.

David: Yes. It has been reported by the media that China has already introduced such terms to some projects and contracts for natural gas, where such contracts can be cancelled. Two things can happen when we talk about cancellation. One is delay, the other is real cancellation, which simply cuts off the purchase. Some just delay, and will buy again after a while. In either case, of course, there will be an immediate impact on export. The second most impacted is, without doubt, education.

Chinese students now account for 25% of the students in all universities across Australia. Now there are restrictions on Chinese entering Australia. Many students cannot go back to school even if they want to. The relationship between universities and that between students…the tuition fees have been paid and are not refundable. Alternatively, some universities have taken certain responsive actions, such as putting their courses online, and making them accessible by Chinese students electronically or via the Internet.

Host: Exactly how many students will substantially be affected, based on the numbers?

David: More than 100,000 in our preliminary estimation.

Host: More than 100,000. Wow! If each of them pays $40,000 a year, that will be a huge sum.

David: A rather handsome amount. As I just mentioned, these 25% Chinese students contribute a big sum of $34 billion a year to the Australian economy. Therefore, if they cannot come back, the Australian economy will be affected to a certain extent. Third is tourism. This goes without saying. Flights are cut, people can’t leave home, so naturally Chinese tourists will decrease.

Last year, for example, Chinese tourists accounted for 15% of all tourists in number terms, contributing $12 billion to $16 billion to the Australian economy for that year. In comparison, spending by Chinese tourists in Australia equals the total spending by American, British, Japanese and New Zealand tourists. So, this will depend on how long it will take for the virus to die out, when Australia will reopen its border to Chinese visitors. This determines how long tourism will remain affected.

Host: I have heard that the mud crab is much cheaper now, $11 per ½ kg, down from the earlier $60 per ½ kg.

David: That depends on where you buy it. We have some friends talking about this. Many food exports to China are facing challenges, the mud crab being one of them, and lobsters as well. Take the Antarctic crab for example. On the one hand, media reporting says lots of exporters have piled up their stocks which have become unsalable, but many of our friends have not found any price drop in restaurants. This may take some time for businesses to re-adjust.

Host: Faced with so many impacts now, substantially how much, or predictably how much loss may be caused to the Australian economy?

David: There have been some preliminary assessments recently, the most optimistic of which came from the RBA. The RBA President said a couple days ago at the hearing that this virus, just like SARS, will bring a short-term impact, but we may catch up in the second half of the year, so it should not have great effect on the Australian economy. At this stage, he maintains his initial view that Australia achieved approximately 2.75% in economic growth for 2019. He also mentioned that uncertainties were many. Though the impact of [the current virus] will be stronger than SARS, he maintains such a view for the time being.

According to ANZ, their economic experts said that Australia might be affected in the first one or two quarters, but will be able to catch up in the last two quarters. They also said the impact might not necessarily be significant at this stage, but the scale of such impact was still unknown.

Host: Yes. That depends on the development of the epidemic.

David: Yes. On the part of Westpac, they said they have adjusted down to 1.9% from their original estimate of 2.1%.

Host: From 2.75% to 1.9. That’s harsh.

David: Yes. You may find a big difference between the RBA and Westpac, but now it is still too early to make any comments. Another thing is, Standard & Poor, a rating agency, has preliminarily adjusted down their forecast of China’s economic growth for this year. Their earlier forecast was 5.75%, but now they said it might drop to 5%. Is it true that it will drop from 5.75% to 5%? No one know yet. How much will the Australian economy be affected if it drops from 5.75% to 5%? No one has any rough ideas yet, since we still have more than half of a year’s time to deal with it.

Host: Many people say in their analysis that after this epidemic, momentum will be restored rather swiftly. That’s what happened in the past. However, we still need to be well prepared while waiting for the end of the epidemic.

David: Sure we hope this will pass as soon as possible.

Host: Correct. Great thanks to Mr. David Chu, Head of International Business of ShineWing, [for sharing] with us what impact can be expected of the novel coronavirus at present on the Australian economy. Thank you!

David: Thank you Thomas! Thanks everybody!

Get in touch

David is attuned to the Asian listed company market, international taxation issues, corporate regulations and various stock exchange requirements and is highly regarded in the market place. Reach out below to discuss how we can support your business during this challenging time.

The post What is the expected impact of the coronavirus on the Australian economy? appeared first on SW Accountants & Advisors.

This was the observation of ShineWing Australia’s Managing Partner, Mr Danny Armstrong, at today’s Australia China Business Council (ACBC) Canberra Networking Day, of which the firm is a new national partner and event sponsor for today.

Mr Armstrong noted that while trade and investment between the two countries remained strong, he echoed the sentiments of ACBC National President, the Hon, John Brumby AO, that many commentators and analysts all too often underestimate the growth and sheer dynamism of the Chinese economy – as well as the huge benefits of this to the Australian economy and our living standards.

ShineWing Partner, John Paolacci and Malcom Turnbull at Canberra Networking Day

Mr Brumby quite rightly points out if we look at the $183 billion of two-way trade between our countries as a great achievement, that has undoubtedly lifted Australian household incomes and living standards and helped build some great Australian companies, then this really is only the beginning.

“Having lived in Shanghai for five and a half years and working to set up a big Australian bank, I am confident that business can continue to lead the way in cultivating strong, mutually respectful bonds between our two countries.

“There are extraordinary opportunities for Australian exporters as well as service providers by deepening our connections through trade and investment. However, we must understand the way in which we can do business together and China can be tricky to navigate if you don’t have the right partner or experience,” he said.

Mr Armstrong noted there are many areas where China is actively looking to form long term partnerships to help them continue to develop and transform their economy. For example, like Australia, China is facing increasing pressures from an aging population, with a predicted 248 million Chinese over the age of 60 by 2020.

“While the Chinese Government has embarked on an ambitious program to transform its aged care industry, the sector is still in its infancy.

“Policies have been put in place to actively attract investment and encourage the adoption of best practice services and infrastructure to meet the goals of providing 35 to 40 care beds per thousand elderly citizens, and a workforce of 10 million aged care workers by 2020.

“As our partner and Aged Care Leader John Paolacci stated on the panel session today, this represents enormous opportunities for Australian companies to take their expertise and learnings to China and, in the process, help deliver strong and more positive relationships between our two countries,” he said.

2018 Canberra Networking Day – Julia Bischop

The ShineWing delegation

For more information, please contact:
Amanda Lee
Head of Business Development and Marketing
T: +61 8653 1853
M: +61 430 322 306

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