With the Coronavirus epidemic unfolding, Italy in complete shutdown, global shares have plunged with Monday being the worst day since the financial crisis. It is no wonder that investors nerves have been rattled but we believe that panic based decision making is a recipe for disaster resulting in potential losses in capital values for the future. There is no doubting that the crisis will have serious repercussions for some companies, examples which would include pubs, restaurants, sports entertainment, travel and the banking sector which may see a spike in bad debts. Central banks will be forced to provide both a monetary and fiscal stimulus with interest rates being cut even further along with tax cuts and direct assistance to some companies to ride out potential cash flow shortfalls.
The market turbulence that we have experienced recently will offer opportunities for investors seeking to invest in high quality businesses which have been caught up in the current turmoil. We believe that a diversified portfolio both by sector and geography will reward investors with a longer term horizon. It is very important at times like these that we remain true to our view that staying invested and not attempting to time markets is the way forward.