In light of relevant world events like the coronavirus epidemic as it unfolds, INFUSION360’s value add is bringing a dynamic perspective into managing our clients’ investments. Below is a global distribution of cases as of 24th February 2020.
A strong run – Markets have seen a strong run in the last 14 months and valuations now seem overvalued in certain sectors. The epidemic served as a catalyst for some to exit and take profits. On a micro level, airline share prices have plunged in forecast of a sickly travel bookings rate in the near future.
China in its obscurity – There is lack of confidence in Chinese data, economic or health. However, the most recent WHO report indicates the rate of new cases is declining meaningfully. The markets have however reacted bearishly to ex-China spread of new cases.
As compared to SARS – The coronavirus is more contagious but less deadly so far. The Hong Kong stock index (HangSeng) plummeted by 10% over 8 weeks. Once new SARS cases slowed, HangSeng recovered to its peak in 4 weeks.
Our take on COVID-19 with a Market Focus
Ultimately, issues like these have far-reaching and a global effect on the markets and as a result, presents itself as a buying opportunity. The important challenge for an investor to focus on should be rather finding quality assets that overreacted to bad news. Consider would China’s growing middle class reduce their demand on Australian agricultural produce like dairy or beef. If not, then perhaps the crisis has presented itself as a buying opportunity.
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