ASK THE EXPERTS

CLOSE BROTHERS ASSET MANAGEMENT’S ANDREW MACKINTOSH-WALKER JOINS US TO ANSWER A QUESTION ABOUT THE IMPACT ON MARKETS AMID THE COVID-19 OUTBREAK.

WHAT HAS HAPPENED AND HOW ARE YOU POSITIONING CLIENT PORTFOLIOS?

ANSWER: The outbreak of Covid-19 that began in China’s Hubei province in December has now spread to other regions of the world, causing a dramatic and swift sell-off in financial markets. Given that Covid-19 is a new strain, it is still far too early to know the economic outcome of the virus, however we believe that the impacts, albeit significant, will be mostly temporary. We cannot shed light on how long this outbreak will last, but we can look at precedents and analyse data as it becomes available.

Central banks and governments globally stand ready to act to help see economies and businesses through this period. While the collapse in oil prices also proved to be disruptive, the benefits of lower oil prices will feed through to consumers as the year goes on.

So where do things go from here? At the time of writing, the pandemic is not yet over and perhaps we need to see the peak of cases before the market recovers. The ‘close down’ of countries will inevitably slam the brakes on economies, but we believe the virus is transient and will inevitably pass.

Beyond reviewing our existing stock holdings in terms of quality, resilience and debt levels, this is the time to look for opportunities in quality businesses that are now more attractively priced.

At times such as this, investment bonds and alternative assets provide our clients with diversified portfolios. While we are long-term investors, we will remain vigilant to developments, enabling us to swiftly respond to further risks and anticipate emerging opportunities.

Your capital is at risk. Investments can go down as well as up.