Coronavirus conundrum: should you buy, hold or fold?

Global markets fell in tandem this week and investors need to decide their next move. Taha Lokhandwala reports

Stock markets felt the full force of investor panic last week with more than £3 trillion wiped off the value of companies and every major market ending up in the red. A continued spread of the coronavirus and economic shutdown could see businesses left scrambling for profits and investors waiting for returns. Those with skin in the game face a conundrum.

A standstill global economy would be catastrophic. On the other side, share price falls have been indiscriminate. EasyJet, the shorthaul airline, fell by 26pc, more than six times the market average. Such irrationality has left room to pick up bargains.

Braver investors could take this a step further. In every crisis there is opportunity, and some businesses will be providing the right service at the right time. Fearful investors will not be looking for bargains, but safer places for their money.

Whether you sense an opportunity or fear the worst, Telegraph Money has you covered.

AS SAFE AS HOUSES

Investors can turn to an array of options to help protect their savings – some that even keep them invested.

Gold is a common store of wealth but another way to tap into it is via gold mining stocks. Share prices follow the ups and downs of the gold price, but with more vigour. Gold miner Centamin’s share price has risen by 13pc since the crisis began, while Barrick Gold, a rival, has gained 23pc. BlackRock Gold & General, a fund, invests in miners from around the world, and is 6pc higher.

Other businesses with no exposure to China or global trade should be protected. These include utilities such as National Grid, Severn Trent and United Utilities.

FW Thorpe, a designer and manufacturer of lighting, has no sales or supply chain exposure to China or the Asia Pacific region. Liberum, a broker, rates it as a buy.

Conventional wisdom is to buy bonds issued by developed countries such as Britain, America or Japan. However, investors can get better yields from company bonds that will expire – and repay investors their money – in one to three years, known as “short duration”.

Gold is a common store of wealth, but a way to tap into it is via gold mining stocks

BUY THE DIPS

Topping up your existing holdings can be sensible. Markets tend to rise over the long term, so buying in when cheaper can mean better returns.

Renowned fund manager Terry Smith has backed the strategy, but his peers disagree. Charles Luke, manager of the Murray Income Trust, said there were too many unknowns surrounding the coronavirus. Matt Yeates of Seven Investment Management said he was not convinced markets were cheap enough to buy, despite the sell-off.

BUY THE WINNERS

Medical firms with vital supplies are most likely to end up profiting from the outbreak. Novacyt, which is listed on the Alternative Investment Market (Aim), produces kits to test for the coronavirus. Its share price has risen by 200pc since the start of the year. It was the most traded stock via broker Interactive Investor last Monday. Many governments have been issuing strict hygiene instructions to help stop the spread of the virus. The share price of Byotrol, which makes antimicrobial sanitisers and wipes, has doubled since the start of the year. The company is also quoted on Aim.