As concerns over the spread of the coronavirus continue to hit the headlines, we felt it timely to offer comment on the current levels of volatility in the markets and what investors may do in response.
Until recently markets had taken the virus in their stride. However, as the outbreak has spread beyond China, uncertainty levels have risen considerably, from both an investor sentiment view point and following economic opinion on the global impact on supply chains and consumer demand.
Here is a brief overview from our team at Schroders, both of the current impact on markets and the possible longer term effects on the economy:
Johanna Kyrklund, Group Chief Investment Officer and Global Head of Multi-Asset Investments at Schroders, said:
“Until we see a peak in the coronavirus infection rates, efforts to contain the virus will significantly dampen economic activity. Markets also have to digest the likely impact of supply chain disruption on corporate earnings. Investors can expect a rocky ride in coming weeks, but markets are underpinned by the fact there is plenty of money swashing around on the side lines that could be invested. And of course bond yields remain very low, making equity yields more attractive. One area to watch is emerging markets where value is starting to emerge in some of the equities and currencies.”
At Finura, in times of volatility, we always encourage Clients to maintain a long term view on their investments. There will always be factors that effect short term returns and the coronavirus is no exception. As a result, we maintain our view that it is time in the markets, not timing the markets that will assist Clients in achieving their objectives.
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