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Coronavirus and markets

Is recovery in sight for flu-hit markets?

27 February 2020

With the coronavirus dominating the newsflow, how worried should investors be as markets begin to feel the strain from the effects of the viral outbreak?

Our Chief Investment Officer talks about the impact of the coronavirus and recent changes in portfolio positioning.

The current landscape

The Wuhan viral outbreak has dominated the month’s newsflow with markets trying to second guess whether it could develop into a global pandemic.

Despite improving data on the world economy, safe haven assets such as bonds have remained in demand due to ongoing investor uncertainty.

Over the next month or so we would expect to see the economic impact of the Wuhan outbreak start to show up in the numbers. If markets are comfortable that the viral outbreak has been contained, a recovery in the world's manufacturing and trade-oriented sectors is likely.

In terms of portfolio positioning, we have added to Emerging Markets Equities due to a pick-up in the lead indicators and trade-oriented activity in particular. Meanwhile, we think that the bond market is priced too pessimistically for future growth and inflation expectations, and are positioned accordingly.

As ever, we recommend investors get invested, stay invested and stay diversified.

Is recovery in sight for flu-hit markets?

As part of our aim to keep clients informed of our current investment views and how these themes are impacting your discretionary portfolios, Toby Cross, Head of Client Investment Solutions, talks to Will Hobbs, Chief Investment Officer, about the impact of the coronavirus and recent changes in portfolio positioning.

Things to consider

The value of investments can fall as well as rise. You may get back less than what you originally invested.

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