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Tim Hext: Banning unvaccinated workers could impact our economy

As Melbourne construction workers protest mandatory vaccinations, investors may want to consider how a ban on unvaccinated workers could impact the economy, says Pendal’s Tim Hext

THIS WEEK has been relatively quiet for bond markets, despite an attempt at excitement around China.

I learnt long ago that little happens by accident in China.

The government has the ability and the smarts to control what is going on. Letting Evergrande wobble is more about sending a message than a misguided step that will send the economy into freefall.

Of course the usual chorus line of doomsdayers have lined up to predict just that.

I am not one of them.

Maybe eventually they do stumble, but you’ll go broke betting on it long before then.

The impact of banning unvaccinated workers

Our attention is more focused on what is happening domestically — in particular the how and when of re-opening in NSW and Victoria.

Find out about

Pendal’s Income and Fixed Interest funds

The area of concern for us is how unvaccinated workers are treated.

The concern is less ethical — I will leave readers to their own views — but what it means for the workforce.

If one in ten workers end up unvaccinated, whether for health or personal reasons, their potential exclusion will have a significant impact on the supply side of the economy.

Most employers are currently awaiting government guidance, but until rapid testing is widely available it seems many will be banned from working.

The demand side of the economy is likely to return quicker than the supply side.

We are increasingly confident that 2022 will see higher — not lower — inflation and the RBA will be tested on its benign view.

Wages should also pick up faster.

Future inflation as measured by markets remains stuck around 2%, which to us provides an opportunity.


About Tim Hext and Pendal’s Income and Fixed Interest boutique

Tim Hext is a portfolio manager with Pendal’s Income and Fixed Interest team (formerly Bond, Income and Defensive Strategies).

Tim has extensive experience in banking, financial markets and funding including senior positions with NSW Treasury Corporation (TCorp), Westpac Treasury, Commonwealth Bank of Australia, Deutsche Bank, Bain & Co and Swiss Bank Corporation.

Pendal’s Income and Fixed Interest boutique is one of the most experienced and well-regarded fixed income teams in Australia. In 2020 the team won the Australian Fixed Interest category in the Zenith awards.

With the goal of building the most defensive line of funds in Australia, the team oversees $A22 billion invested across income, composite, pure alpha, global and Australian government strategies.

Find out more about Pendal’s fixed interest strategies here


About Pendal Group

Pendal is an independent, global investment management business focused on delivering superior investment returns for our clients through active management.

Contact a Pendal key account manager


This article has been prepared by Pendal Fund Services Limited (PFSL) ABN 13 161 249 332, AFSL No 431426 and the information contained within is current as at September 22, 2021. It is not to be published, or otherwise made available to any person other than the party to whom it is provided.

This article is for general information purposes only, should not be considered as a comprehensive statement on any matter and should not be relied upon as such. It has been prepared without taking into account any recipient’s personal objectives, financial situation or needs. Because of this, recipients should, before acting on this information, consider its appropriateness having regard to their individual objectives, financial situation and needs. This information is not to be regarded as a securities recommendation.

The information in this article may contain material provided by third parties, is given in good faith and has been derived from sources believed to be accurate as at its issue date. While such material is published with necessary permission, and while all reasonable care has been taken to ensure that the information in this article is complete and correct, to the maximum extent permitted by law neither PFSL nor any company in the Pendal group accepts any responsibility or liability for the accuracy or completeness of this information.

Performance figures are calculated in accordance with the Financial Services Council (FSC) standards. Performance data (post-fee) assumes reinvestment of distributions and is calculated using exit prices, net of management costs. Performance data (pre-fee) is calculated by adding back management costs to the post-fee performance. Past performance is not a reliable indicator of future performance.

Any projections contained in this article are predictive and should not be relied upon when making an investment decision or recommendation. While we have used every effort to ensure that the assumptions on which the projections are based are reasonable, the projections may be based on incorrect assumptions or may not take into account known or unknown risks and uncertainties. The actual results may differ materially from these projections.

The Target Market Determination (TMD) for the Fund is available at www.pendalgroup.com/ddo. You should obtain and consider the PDS and the TMD before deciding whether to acquire, continue to hold or dispose of units in the Fund.

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