Coronavirus – what does it mean for your investments?
There are no definitive and reliable opinions as to how long the duration of measures to contain COVID-19 will be required and there is no precedent for the current health and economic situation. This means that it is largely guesswork trying to assess the extent of the economic downturn and the resultant impact on investments, such as shares and property.
Until we know when and how the widespread lockdown can be significantly and permanently eased the markets are likely to remain very volatile. Hopeful signs, such as the plateauing of new cases and deaths, are likely to be offset by rapidly rising unemployment and terrible financial results being announced by businesses worldwide.
While everyone is hoping for a “snap back” in the economy within months, this is far from certain as some restrictions are likely to be on-going until a vaccine or cure is found, hopefully within a year. Unfortunately the increase in infections in Japan and Singapore since they eased restrictions highlights that the risks of re-opening economies are significant. The world has been shocked by the speed and severity of this crisis so it is most unlikely that we’ll be back to “business as usual” for at least a year and quite possibly considerably longer.
Given so much uncertainty, it is not surprising that the initial reaction in financial markets was so negative, with the share market falling over 30%, but somewhat surprising that there has been a 20% recovery from the nadir on 23 March. The US and Australian share markets are now reassessing the impact on business and it won’t surprise if we see some further falls in reaction to disappointments, such as government announcements of more prolonged restrictions on various aspects of life.
The big question many are asking is do their investments require a fundamental change in their investment approach to try and protect against any possible further downturn. This really depends on a wide range of individual factors as well as the broader uncertainties we are living with so there is no simple answer. We recommend that you discuss with your financial adviser whether any strategic change is advisable for you and caution against emotional reactions to further good and bad news, both of which are likely.
A new era for Ramsay Financial Group
Steve, Andrew & Josh are pleased to advise you that we have now left Financial Wisdom Limited and are operating under our own financial services license. ASIC granted Ramsay Planning Pty Ltd a financial services license recently and, this is now effective.
As previously advised, you will be dealing with the same advisers and support teams in Perth and Sydney and the change of licensee will not impact your superannuation, investments or personal insurances in any way.
We are looking forward to this next era for Ramsay Financial Group and are working hard to ensure that we continue to provide you with the highest level of financial guidance in these challenging times. We are focused on assisting you to navigate all the current uncertainty and don’t hesitate to contact us if you have questions and require assistance.
We are sending you our new Financial Services Guide (FSG) in a separate email.
This newsletter contains general advice. It does not take into account your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision.