The implications of the coronavirus outbreak


The extremely rapid spread of coronavirus in China coupled with the risk of a global pandemic led to a substantial correction in the equity market, leaving investors unsettled.

The potential for modest economic growth this year hangs by a fine thread: over the coming months, it will become clear how the virus will develop. The situation may have improved by April – or it could be worse. Depending on the scenario, a global recession and a long phase of price corrections for the equity market are both possibilities. Currently, our optimism prevails that the situation will have started to resolve by April. The drastic measures taken in China to contain the virus give rise to hope that the situation will ease. For a number of months now, we have been recommending maximum diversification, taking account of a range of asset classes. Our preference remains US equities with a focus on the technology and healthcare sectors. A high proportion of alternative investments has proven and will continue to prove effective in curbing fluctuations in value on the stock market.