How should investors react to coronavirus?

Posted by TEBI on March 13, 2020

How should investors react to coronavirus?


There are 132,000 confirmed coronavirus cases worldwide, and the pandemic doesn’t seem to be slowing down. With the number of cases outside China increasing, the markets are rattling and investors are feeling uneasy.

On Friday 21st February, Italy identified three confirmed cases. By the following Monday, it was up to 150. At the time of posting this blog, it’s 15,113. Italy has now been quarantined: The Venice Carnival closed early, football matches have been cancelled, and the already-teetering Italian economy is battling.

What’s really worrying people is how far the virus might spread, and the markets are reflecting this uncertainty.


Coronavirus and the markets

Equity markets have tumbled and bonds outperformed, and more funds are flowing into perceived ‘safe haven’ assets.

The travel and tourism industry are taking a particularly big hit. People are avoiding flights to Asia, and with the outbreak in Europe, travel is being avoided there too.

The best thing for you to do as investors? Sit tight and try not to react. I know that’s easier said than done, but history shows that the markets have always recovered from similar setbacks.


A table showing that in the majority of cases, after an epidemic markets typically recover within 12 months

Ensuring your portfolio is globally diversified across asset classes is the best possible thing you can do right now. Whether the next outbreak is east or west, north or south, your balanced portfolio will minimise your exposure.

And as we’ve seen in recent weeks, when one asset class weakens, another strengthens. A diversified portfolio will put you in the best position to maximise your returns, despite what may be happening in the world.

Stuart Ritchie, Director of Wealth Advice at AES International. You may like to read our previous article from AES:

How to make sure you can afford your retirement


Picture Free To Use Sounds via Unsplash



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