It has been difficult to avoid seeing numerous headlines relating to the outbreak of the Coronavirus and the subsequent market reaction which has seen sharp falls in World Stock Markets.
The virus appeared to have been contained last week, with the majority of cases being seen in China. However, over the weekend the number of viral cases rose quickly in Italy, Iran and South Korea. The outbreak in Italy has come as a surprise to many and the issue here is the EU’s freedom of movement policy. Clearly, this will lead to an increase in cases in other parts of Europe.
The short-term outlook is, therefore, one of potential disruption to various industries, but it is difficult to know the exact impact at this stage.
We are monitoring this very closely and have specific investments within the portfolios, such as bonds and Gold, to help protect them during difficult periods such as these. We are also currently looking at other defensive measures in the event of a deterioration in the global economy.
It is worth noting that viral outbreaks are not a new phenomenon, with SARS and Swine Flu being some of the others that come to mind in recent history. Whilst causing short-term disruption at the time, markets recovered reasonably quickly and moved on, following those outbreaks.
It is important to keep in mind that Portfolios will not be immune from falls in markets during disruptions such as these; and when this happens it will affect values in the short term, however, as always we should remain focussed on longer-term performance.
If you have any queries or would like to discuss the above, please do not hesitate to contact us.