Coronavirus - Market Update For clients and introducers Stuart - - PowerPoint PPT Presentation

Coronavirus - Market Update

For clients and introducers

Stuart Carswell Director Alex Brandreth Chief Investment Officer

18th March 2020

Pareto Financial Planning is authorised and regulated by the Financial Conduct Authority

Contents

• The impact of Coronavirus (COVID-19)
• What has been the response from Governments
• How has this impacted markets
• How current moves compare to other historic market moves
• Time in the market, not timing in the market

Background

• The Coronavirus (or COVID-19) started in Wuhan, China in December

2019

• Wuhan is the capital of Hubei province – a landlocked province in the

middle of China

• The virus then spread across Asia and more recently in Europe
• On Saturday 14th March the World Health Organisation said that Europe

is now the epicentre of the pandemic

The impact of COVID-19

The impact of COVID-19

The impact of COVID-19

The impact of COVID-19

COVID-19 – outlook for the UK

Source: Financial Times; Containing coronavirus: lessons from Asia

How have Governments responded

• 23rd January – Chinese government impose lockdowns in Wuhan and other cities

in Hubei province

• 28th January – Hong Kong closes borders to mainland China
• Beginning February – South Korea increasing tracking of positive cases
• 27th February – Japan announces school closures
• 3rd March – US Federal Reserve cuts interest rates by 0.5%
• 9th March – Italy announces restrictions over whole country
• 11th March – Bank of England cuts interest rates by 0.5% to 0.25% and announces

in the budget £5bn in emergency response fund to support NHS

• 14th March – US imposes travel restrictions from Europe
• 15th March – US Federal Reserve cuts interest rates by 1% and re-starts

Quantitative Easing by $700bn

• 16th March – Spain goes into lockdown
• 16th March – Germany closes the border it shares with five other countries.
• 16th March – UK government request for social distancing

How markets have reacted - Equities

Source: Alpha Terminal (Date: 31/12/2019 to 16/03/2020)

How share prices have reacted

Source: Alpha Terminal (Date: 31/12/2019 to 16/03/2020)

How markets have reacted

Bon

• nds /

/ Commoditie ies / / FX

Source: Alpha Terminal (Date: 31/12/2019 to 16/03/2020)

Bull and Bear Markets

Time in the market, not timing in the market

Source: Fidelity, ‘Understanding market volatility’, FTSE All Share

Investing for the long term

Notes: Cash = ICE LIBOR – GBP 3 month; global equities = the MSCI World Index; US equities = S&P 500; UK equities = FTSE All-Share; inflation = Retail Price Index, (Jan 1987=100); global bonds = Bloomberg Barclays Global Aggregate; European equities = MSCI Europe; UK gilts = ICE BofA; UK gilt (local total return) emerging market equities = MSCI emerging markets; all shown gross of taxes and of fees and in GBP. Source: Vanguard, Bloomberg and Factset and Bank of England, as at 31 December 2019.

The Pareto Approach

• We are helping to shape investment decisions for the long term. Short

term market moves can make us feel uncomfortable, it’s important to not forget long term goals and objectives

• We work with experienced investment professionals when investing our

client assets

• The overwhelming feedback from these firms is they are looking to take

advantage of these current market conditions

• In All Matters Financial it is important to stay calm and not make rash
• decisions. Particularly during these periods of stock market volatility
• We are here to help and support you during these volatile times

A Typical Balanced Portfolio

Investment Manager

34% 32% 10% 10% 9% 5%

UK Equity International Equity Government Bonds Corporate Bonds Alternatives Cash

Passive Multi-Asset Fund

15% 45% 32% 8%

UK Equity International Equity Government Bonds Corporate Bonds

Source: Brown Shipley and Vanguard (Life Strategy 60% Equity fund)

Conclusions

• If the UK follows Italy’s path – expect more bad news in the short term.
• However, stock markets have fallen considerably already and some

sectors/companies that are more ‘at risk’ have demonstrated higher volatility.

• The performance of safe havens asset highlight the importance of being

well diversified.

• Timing the market is very difficult – it’s time in the market which

matters.

• We are speaking with all our investment managers on a regular basis.
• We are here to help and support you during these volatile times

Questions?

The content of this presentation is for your general information and use only and is not intended to address your particular requirements. This article should not be relied upon in their entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information which has been

• btained from sources believed to be reliable, there can be no guarantee that such

information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular

• situation. We cannot accept responsibility for any loss as a result of acts or omissions

taken in respect of any articles. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts. Levels and bases of, and reliefs from, taxation are subject to change and their value depends on the individual circumstances of the

• investor. The value of your investments and the income derived from them can go down

as well as up and you may get back less than you invested or nothing at all. Past performance is not a reliable indicator of future results.

Information you need to be aware of