The expansion of the coronavirus outbreak is frightening and whilst this needs to be kept in perspective, over the coming weeks it is likely to continue to spread and sadly, there will be more deaths. There are signs the disease is containable with some nations, including developing countries, being quick to isolate those infected and nip their outbreak in the bud. Even China, with just over 80,000 recorded cases, appears to be winning its battle as the number of new infections fall.
For the moment, there is confidence that other nations such as South Korea and Italy will take the steps necessary to isolate the disease but this is not so much the case for Iran, where it seems the authorities have been in denial. The country’s links to Afghanistan and Syria seem to leave a high probability that the virus will find a base in the Middle East which would lead to continuing outbreaks around the world.
The human tragedy aside, the economic implications of controlling the outbreak are significant. Supply chains will be disrupted as factories close, popular events are being cancelled and health services will come under increasing strain. Global stock markets are falling and are likely to remain volatile, and whilst we believe the falls currently reflect the economic costs of the outbreak as it now stands, the situation is very fluid and a global recession before the end of 2020 cannot be discounted.
An important consideration is that our investment recommendations are designed to support your long term financial goals and whilst we realise you may be worried, it is important to remember that typically, short term events have little significance when looking at the long term outcome.
If you are unsettled or have any concerns over the investment markets or your portfolio, please contact your Wingate adviser.