Cross Contagion

Equity markets react to concerns about COVID-19 pandemic

Markets are reacting to news that COVID-19 seems to be spreading outside of China, a precondition for calling it a pandemic, and the second-order impact on the Australian economy.

Stories about pandemics can be scary. Smart investors will remember their goals and investment strategy before getting caught up in daily headlines.

Firstly, put the recent share market fall into context. Some sectors of the Australian economy may experience a hit if fear of pandemic spreads. But investors who have a medium or long-term investment horizon need to look at business prospects over the next five to ten years.

Few bad news stories come without opportunities, and even long-term investors may be able take tactical advantage. Prepared investors may be able to ‘buy on the dip’. Some investors who hold shares that have increased price, for example gold miners, may want to tilt their portfolio towards investments that may have succumbed to short term panic selling.

No one can predict the unpredictable such as a pandemic. Tactical manoeuvres to take advantage of short-term market jitters are not suitable for every investor. But smart investors know to be prepared for opportunities.

A margin loan gives suitable investors access to additional investable funds and the flexibility to adjust their portfolios without the need to sell long-term investments.

To find out more or to discuss how we can work with you and your clients, call the team at Leveraged on 1300 307 807.