Brite
  • About us
    • How we invest
    • Invest with Brite
    • Our services
    • Our fees
    • The Brite team
    • The Brite platform
    • Investment portfolios
  • Pensions
    • Transferring a pension
      • Transferring UK pensions to Australia
      • Transferring UK pensions to South Africa
      • Transferring UK pensions to the UAE
    • Lifetime pension allowance
    • Defined benefit pension transfers
    • SIPPs
    • QROPS and ROPS
    • QNUPS
    • Guide to saving for retirement
  • Knowledge Base
    • Brite blogs
    • Guides
    • Tools
    • Investing giants
    • FAQs
    • South Africa policies
  • Client Login
  • Contact
    • Careers
    • Our complaints policy

Market update

  • Mark Donnelly
  • March 25, 2020

Update

I’d like to keep you updated with the latest Covid-19 situation. First & foremost, the pandemic is a humanitarian global crisis and this we take seriously. To date, global cases have exceeded 470,000 with over 21,000 deaths, however, the good news is over 110,000 people have also recovered. We expect cases to grow in April as an increasing number of countries around the world introduce curfews, restrictions, and in some cases total police-enforced lockdown of activity.

Nonetheless, we see the reason for optimism and glimmers of light at the end of the tunnel. Hubei province in China, where the coronavirus pandemic originated, lifted almost all lockdown measures this week, after reporting only one new infection in the last week. Italy has seen consecutive declines in the numbers of new cases over the last couple of days. Despite two waves of outbreaks, South Korea has essentially ‘flattened the curve’. Lockdown, social distancing and mass-testing have proven to be effective in containing the spread of this virus. Additionally, there may be some positive developments on the medication front to treat this virus; this would ease pressure on hospital resources and ICUs.

Amidst this risk and essentially a global economic shutdown, governments are making substantial measures to backstop the financial liquidity difficulties faced by multinational companies, SME’s and individuals. In the U.S. the Trump administration is seeking to pass a stimulus package of near $2 trillion, still being negotiated in the Senate. For context as to the magnitude of the stimulus, this is nearly 3 times the initial authorized amount and more than 5 times the disbursed amount by the U.S. Treasury during the global financial crisis of 2008-2009. The Federal Reserve has essentially announced ‘unlimited quantitative easing’.

The European Central Bank has announced US$820 billion in government and private sector bond purchases until the end of the year. A global recession seems likely given the slowdown, the only question is how severe. The conditions for the eventual inevitable recovery are, however, being put in place.

We must be clear that volatility is not risk. Risk is the chance of capital loss whereas volatility equates to the fluctuations of an asset class during the holding period. Risk assets such as publicly-traded equities tend to be very volatile. Equity markets are forward-looking and dislike events that cause uncertainty in the short-term. This uncertainty causes volatility as investors attempt to price in the various scenarios as they are playing out.

Despite the reasonably high level of sophistication and efficiency in these capital markets, human nature has not changed. Investors tend to underreact to medium to high probability events and overreact to low probability events. Few, if any, could have foreseen that we would be at this global economic and financial juncture caused by a coronavirus flu strain coming from a province in China. With all this uncertainty there is certainly the possibility that markets have overreacted to the downside and may continue to do so.

History has proven that getting emotional and selling is the wrong thing to do during market downturns. Investors tend to have loss aversion meaning that the pain of a loss is felt more acutely than the good feeling of a gain. This is why many investors sell. The largest 1-day increases have happened during bear markets and trying to time the market is a risky endeavour. There is a significant opportunity cost to being out of the market during these few large up-days and this has a negative impact on long-term returns.

The longer the time horizon of investment, the less impact that this crisis will have. Prudence is still required at this stage; we are staying the course for our clients in globally diversified equity and fixed-income portfolios. We are focused on ensuring that individual portfolios are positioned optimally according to the client’s risk preferences and in the client’s best interests long-term.

Recent posts

Millions of Brits expected to benefit from Abolished Lifetime Allowance

Mark Donnelly March 15, 2023

Jeremy Hunt recently unveiled new plans to abolish the lifetime allowance for pension savings to address concerns that set allowances are driving doctors and other professionals into retirement.  This news is huge for UK expats with

Read More »

Taking stock: US Banking System update

Mark Donnelly March 15, 2023

Following recent developments over the last few days, we have put together a short market update on the US banking system, including the collapse of Silicon Valley Bank and what measures are being taken

Read More »

What are the 11 GICS stock market sectors?

Mark Donnelly March 7, 2023

What are the 11 GICS stock market sectors? If you are new to investing, you may have heard of the 11 GICS stock market sectors. But what exactly are they, and how are they

Read More »
image

Regulation

Brite Advisors Pty Ltd. is licensed in Australia with the ASIC (AFSL 337670). The Brite Advisors SA (Pty) Ltd is registered with the FSCA in South Africa under FSP number 51690. In the UK, Brite Advisors (UK) is a trading style of Basi & Basi Financial Planning Ltd. which is authorised by the Financial Conduct Authority (FRN 513993). Brite Advisory Group also has numerous pensions schemes, administered in Hong Kong, UK, Gibraltar and Malta.

Brite Advisory Group has taken all reasonable steps & care in producing the information & statements issued on this website and accept no responsibility or liability for any errors, omissions or misstatements. Brite Advisors and its representatives have provided opinions, forecasts and recommendations based on information available at time of issue and hold the right to change their judgement and assumptions at any time and without notice.

There is always risk involved in purchasing financial products.

There is no guarantee of the future performance of financial products regardless of previous performance.

Quick Links

  • About us
  • Pensions
  • Our services
  • Terms & conditions
  • Privacy policy
  • Disclaimer
  • Contact

Contact Info

  • [email protected]

Brite © 2023 All Right Reserved.