Coronavirus & the investment markets
Updated: Mar 9, 2020
We expect you are noticing the media headlines regarding Coronavirus and the higher levels of investment volatility. We want to reassure you that we continue to actively monitor your investments closely.
After a strong 12 months for investment markets, February has seen a reversal in confidence due to the Novel Coronavirus outbreak, a more contagious virus than SARS (2002) and MERS (2012). The issue for consideration is the impact on the global economy and the influence of China which is now far larger than it was in 2002 when SARS occurred. Using SARS and MERS as a benchmark in history, it is expected that markets will typically rally once the number of new cases peak. Until that stage, we do expect investment markets will be somewhat volatile. Some commentators suggest a 6 to 8 month period between initial outbreak and peak cases, suggesting July or August.
The advantage of a diversified investment portfolio is the range of holdings across different sectors and regions. A key strategy of investing is to include local and international shares, property & infrastructure as well as interest generating investments to position your portfolio for both the good times and times of volatility. We have been discussing with the fund managers and their current views on markets, and can confirm that the active managers are taking a safety first approach, banking profits, and holding a greater percentage of cash. We expect managers will wait for signs of an improving market before deploying cash as new opportunities arise.
Whilst there is uncertainty in the short term, we believe that in the long term it is likely that global economic growth will continue, supported by low interest rates and by governments poised to respond.
The views in this article are of a general nature only and should not be considered
personalised advice. A disclosure statement is available and free of charge.