Finally, we can all take some comfort knowing the pace of the spread of the virus has stalled. The number of new cases, in fact, seems to have peaked at about 100,000 a day (though the accuracy of this data is questionable due to sporadic testing across many countries). The focus will now turn to a slow easing of restrictions to reopen frozen economies and looking beyond the peak at the dark economic shadow that has been cast by COVID-19. The second-wave infections seen in Singapore and Japan are reminders of the balancing act that lies ahead. An interesting article from Rice Warner on the various exit options for can be found here on the Firstlinks website.
Governments and central banks around the world have shown a determined willingness to throw everything including the kitchen sink at supporting economies and the financial system. Perhaps this is why share markets have rallied strongly from the lows in March. However, make no mistake in underestimating the economic fallout, many of the job losses will be permanent it will take several years for global the economy to return to the level it was just a couple of months ago.
The road ahead for markets will be bumpy, but this is still a great opportunity for patient investors. History suggests we should see a retest the lows before beginning a long term bull market again, but this seems to be the consensus view and markets have a habit of wrong-footing everybody! One fact is clear, markets have never failed to make a new high and with a fall from ~7,200 to ~5,200 since February, the risk vs reward for shares over the long term is now much more favourable.
The great virus shutdown will make a fascinating history lesson one day. The deaths we are seeing in places like Europe and the US is a human tragedy, it will be worse in the developing world. I’m glad to be living in the “lucky country”, we are an island nation with warmer weather and our government response has made saving lives a priority. Nevertheless, it will be interesting in the future to see how leaders around the world will be judged on balancing the human cost of COVID-19, with the economic and social impacts from shutting down economies.
Its been great connecting with many of you over Zoom over these last few weeks, so please do not hesitate to reach out. You can book a time directly in my diary for a catch up by clicking the link below:
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The information provided should not be considered personal financial advice as it is intended to provide general advice only. The content has been prepared without taking into account your personal objectives, financial situations or needs. You should seek personal financial advice before making any financial or investment decisions.