Coronavirus - Investing Beyond The Headlines

With the spread of the Coronavirus casting a dark cloud over the world, the knock-on effects of the global pandemic are continuing to impact markets at an unprecedent level in our lifetime.

The closure of Chinese factories; which are responsible for around 30% of global exports, the lockdown of large areas of European nations such as Italy and France in an attempt to control the spread, and media hysteria on a global scale, has left Government’s around the world facing a health vs economy battle.  Furthermore, The Oil Price War kick started again after Russia declared it will not take part in limiting the supply of oil by 1million barrels per day as of the 1st of April, adding another layer of pressure to the situation

With all that said, we always recommend clients adopt a long-term view when investing.  If you were to sit and watch markets at any given time, you will see they fluctuate, often wildly, on an hourly basis.  Making decisions based on short-term activity can be extremely harmful to your long-term plans.

If you are able to look beyond the sensationalist headlines of newspapers and tv stations, investing during these periods can present many opportunities. History tells us that now is currently the best time to be utilising any surplus cash or savings given that all funds and stocks are currently trading at a huge discount.  

Commenting on the concerns raised by the virus, GWM's Chief Investment Officer Iain Ramsay said:

"From an economic and subsequently an investment perspective the major concern surrounds the impact the virus has on economic growth. We have already seen the effects the virus has had on manufacturing in the USA, exports from Europe and of course more specifically the damaging effects on the tourism sector, as many countries lock down regions and limit travel to and from their shores"

In line with many economists we anticipate the impacts of the virus will result in lower GDP growth around the world for the first half of 2020, albeit there is still reasons to be optimistic that if the virus can be contained economic growth could resume during the second half of the year."

Investing with confidence while markets are volatile can be difficult. However, history shows that major stock markets have always reacted, and recovered from every downturn.

As you can see from the chart above, in recent times Markets have tumbled on the back of events such as the dot-com bubble in 2000, and the Global Credit Crisis of 2007 before rallying and going on to reach new highs.

Discussing how to guard against market volatility Ramsay added;

"During these uncertain times it's vital investors take a long-term view rather becoming hung up on the hourly fluctuations that are occurring.  And by holding a diverse portfolio with a broad mix of investments across asset classes, sectors and regions ensures you aren't over exposed to any one investment market.

Should you have any concerns regarding your own investments and how these key points relate to your portfolio specifically, I would encourage you to speak directly to a GWM financial adviser. "

© 2019 GWM