Welcome to our wrap for investors of the key coronavirus news this week.


By the numbers

Australian deaths: 101
Australian cases: 7,095
Global deaths: 332,425
Global cases: 5,097,944

The number of global deaths rose by 10 per cent in the last week, a figure that is badly incorrect. News reports state case numbers and deaths are surging across Africa, Latin America, Russia and its satellite states — but few are being counted by governments unable or unwilling to test.


What governments have been doing

Australia had a big win this week when WHO delegates voted in favour of an inquiry into, among other things, the origins of COVID-19.

What this has achieved for Australia is retaliation from an embarrassed China, which is now putting obstacles in the way of Aussie exports. It started with barley and meat, and finished the week with the strangely-timed but long-expected changes to quality inspections on iron ore cargoes.

Most of the political chatter is around how to get people back into work and push the economy out of an expected recession, but travel has been a sticking point.

Queensland Premier Annastacia Palaszczuk has dug in her heels over extending the border lockdown from July to September. The state’s tourism operators say they’ll lose $2bn, while the rest of Australia (and New Zealand) are witnessing their longed-for Sunshine Coast winter getaways vanish.

And industry calls to support a medical supplies industry in Australia are “on the table” for the Coalition. Industry minister Karen Andrews said this week the first move would be to coordinate state and national procurement before looking at a “national order book” for goods.

Her comment came a day before news broke that critical supplies headed to Australia from its ally the US almost didn’t get here, after a shipment was held up under the US Defence Production Act.

Only hasty intervention by diplomats meant the plane was allowed to leave.


What investors have been saying

Chris Macdonald, principal advisor at broking and wealth management firm Morgans, says markets have hit an equilibrium with cheap money flowing through into equities versus a debt hangover and an economic black hole.

“There’s two things that have me cautious; one is that compared to the US, Australia has a pretty good handle on the real numbers around infection rates,” he said.

“The second reality, particularly in the US, is that analysts are going to have to try and model the impact of this quarter into those July earnings numbers. I don’t know how they’ll do it, but I’d expect to see some pretty sobering revisions in June, so that’s another potential wobble.”

Scott Atkins, a partner at Norton Rose Fulbright, believes government measures like the Jobkeeper wage subsidy are simply prolonging the deaths of companies that were always going to die, but does not provide any ideas on how to withdraw support from those while continuing to keep the viable ones alive.

“Saving all companies, even when they are not viable and were in financial difficulty well before COVID-19, is not always a good thing,” Atkin said.

“This [support] could indeed spark a pandemic of a different kind — that of the ‘zombie company’, with entities taking advantage of subsidies and a benign financial market (with historically low interest rates) to keep open the doors to businesses that will never be self-sustaining, all while tying up the very capital investment needed to support new projects and business models in a post COVID-19 world.

“We need to have an honest conversation that some of the business models that were so successful when the clock ticked over into 2020 may no longer be sustainable in the circumstances we now find ourselves in.”


What companies have been doing

The commonly-used metric EBITDA – earnings before interest, tax, depreciation and amortisation – has been given a bit of a tweak with a number of companies around the world presenting ‘EBITDAC’, or EBITDA + coronavirus, when reporting their Q1 earnings numbers.

It’s a calculation of what their core earnings would have been if the global economy didn’t come to a sudden halt.

Bond investors in Europe are also growing concerned about companies using the metric in order to increase their borrowing capacity.

Fibre-network operator Superloop (ASX:SLC) said traffic on its Asia-Pacific fibre network grew by more than 30 per cent “within a matter of weeks” across March and April.

The company said it remains on track to achieve the mid-point of its sales guidance for the June 2020 financial year.

Day hospitals are where institutional investors with a healthcare bent are putting their money.

They’re quicker and cheaper for simple surgeries, so health insurers love them and are backing them heavily.

Australians are getting more used to US-style private health and the rapid shift to telehealth over the last three months will give these centres an edge, as these more nimble outfits can better use digital options to monitor patients pre- and post-op.