Coronavirus: what does it mean for your investments?

 

28 February 2020

There has been significant press coverage of the coronavirus and its effect on markets in recent days and at Seabrook Clark we are monitoring the situation very closely. Although concerns are understandable, our overarching views are informed by our specialist markets knowledge, historical precedent and the care with which our diverse portfolios have been built.

Our minds are drawn to 2003 when SARS hit; despite markets falling significantly at the time, they did recover. Even though there are never guarantees and no-one can predict when or how quickly recovery is likely to happen, a knee jerk reaction is never appropriate when adopting a long-term investment strategy. In fact, at times such as this, the market offers potential to take advantage of lower prices and we are likely to see more volatility before growth returns.

At Seabrook Clark we advise the most sensible course of action, at present, is a considered and calm approach. Stability and a new base will return in due course to the current febrile markets. Indeed, it is likely that if the extreme volatility persists, central banks around the world are likely to intervene and provide new economic stimulus.  Furthermore, the US presidential election in November increases the probability of support and positive measures from the US government and Federal Reserve. It is also now more likely, in our view, that China will inject further liquidity into their economy and favour an early resolution of their trade dispute with the US.

Overall, whilst the current market fallout is very uncomfortable, it is likely to be transient. Looking further ahead over the medium-term, the macroeconomic outlook remains positive with low interest rates and inflation, high levels of employment and most companies delivering on their earnings forecasts. This continues to favour equities over other asset classes to deliver growth over time.

If you have any further questions on how the impacts of the coronavirus are affecting your financial interests, please get in touch by emailing to info@seabrookclark.co.uk, or call us in the office on 01392 875500.

 

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