The COVID-19 pandemic has infected over 3 million people and led to more than 200 000 deaths worldwide (Worldometers as of 29 April 2020). It has also created huge economic uncertainty and volatility.
The outbreak, which began in China in late 2019, was a major shock for financial markets. Many countries have been forced to employ severe social-distancing measures, with profound economic consequences. It’s difficult to know exactly how extensive and how long-lasting the economic impact will be, particularly in a scenario of lengthy lockdowns.
The outlook may be unsettled, but this does not mean one should do nothing. Investors do not have the luxury of waiting for complete clarity on the final impact of the virus. Much will depend on whether and when the market fully embraces COVID-19’s near-term social and economic consequences.
We have identified six signposts for assessing the direction of the global economy and prices. These will inform our decisions as we navigate the crisis.
Any views expressed here are those of the speakers as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients.
The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns.
Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions).
Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.