OCM Commentaries

Market Update 24th February

By February 24, 2020 June 23rd, 2020 No Comments

Good Afternoon,

In light of the volatility we are experiencing in markets today owing to fears over the recent Coronavirus outbreak, as always we wish to keep you updated on our position regarding the outbreak and market movements both in recent days and looking ahead. Looking at the data and developments in the Coronavirus story today, it is our view that we are currently seeing a significant overreaction in markets today which is mainly down to the emergence of new cases of the virus outside of China. Last week, fears surrounding the outbreak were beginning to abate on evidence that the growth of new cases and fatalities in China is slowing, and although this is still the case, today it appears that an increase in cases outside of China has spooked investors, however we continue to view this as a short term effect in markets which will be reversed. As it stands, the number of cases outside of China remains manageable and nowhere near the size of the outbreak in China, and the daily growth rate in new cases outside of China remains low despite new cases emerging in Italy this week.

While we do think that the coronavirus will continue to bring volatility in the near term, recent developments have not impacted our investment outlook. Looking past the noise regarding the coronavirus outbreak, economic fundamentals continue to support our positioning, and we expect the economic impact of the outbreak to be limited to the first quarter of the year. Therefore after careful consideration of the developments, following strong performance year to date, we are prepared to wait out the storm and remain invested, while markets fluctuate on sentiment in the coming days and weeks as we expect any decline to be short lived and for the markets to recover as both central banks and governments do everything they can to support the global economy.

As we have seen in recent weeks, markets tend to overreact initially on new developments in this story, before normalising over time as the noise settles. Rest assured, we are monitoring the situation closely, however at this stage, we remain content in our positioning, noting that we could see further volatility in markets in the near term. If anyone has any concerns let us know,

Kind Regards,

Georgina Stone & Jason Stather-Lodge