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Nigel Green: Investors Should Avoid Knee-Jerk Reactions to Virus

Nigel Green: Investors Should Avoid Knee-Jerk Reactions to Virus
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Monday, 27 January 2020 04:31 PM

Investors are being urged to avoid making hasty decisions after China announced a sharp rise in cases of a deadly new virus that threatens to crimp global economic growth.

Stocks markets tumbled worldwide on Monday as investor worries about the potential economic impact of the coronavirus drove up prices of safe-haven assets such as the Japanese yen and government debt.

Nigel Green, deVere Group chief executive and founder, is speaking out as global stock markets are rattled on fears of the potentially deadly Sars-like virus triggering major sell-offs.

The death toll has now risen to 81 and almost 3,000 people have been confirmed as infected, with 44 cases having been detected outside China, where it originated.

“The coronavirus is the number one threat to financial markets currently as global investors are becoming jittery on the uncertainty," said Green, also a Newsmax Finance Insider.

“But while this health crisis will inevitably hit some sectors, such as travel and retail, most investors who have a properly diversified portfolio should avoid knee-jerk reactions. History teaches us that most issues of this kind have a short-term impact on stock markets,” said Green.

China's yuan slid to a 2020 low and commodity-linked currencies such as the Australian dollar fell on mounting concern about the coronavirus. The yen was the main beneficiary, though its move higher was limited, Reuters explained.

Crude prices dropped below $60 a barrel for the first time in nearly three months, while gold prices surged 1% to nearly a three-week high before paring gains.

Benchmark U.S. Treasury yields fell to lows last seen in early October while the yield on 10-year German bunds, the euro zone benchmark, fell to the lowest in almost two months.

Key indexes for British, French and German equity markets slid more than 2%, as did pan-European markets. Stocks on Wall Street fell more than 1%.

Major markets in Asia, including China, Hong Kong, Taiwan, South Korea, Singapore and Australia, were closed on Monday.

“Most investors should monitor the situation with their financial adviser and sit tight at present. But if it is still escalating next week, with much higher casualty rates, a more defensive approach might be necessary," Green said.

“However, the cost and effort of making such a switch means you do not do it lightly, and more evidence is needed that the virus does pose a medium to long term risk to China and the global economy.”

Green goes on to say: “But that said, this should serve as a wake-up call to all investors to ensure their portfolio is well-diversified across asset classes, regions, sectors, even currencies.

“This is the best way to mitigate risks and the best way to be well-placed to take advantage of the opportunities when they occur.”

The deVere CEO concludes: “Stock markets tend to bottom with the peak in new cases during a public health issue of this kind, before rebounding.

“This is a worrying and serious situation and investors must be vigilant. They should remain properly diversified and remain in the market.”

Nigel Green is founder and CEO of deVere Group. One of the world’s largest independent financial advisory organizations, de Vere does business in 100 countries and has more than $12 billion under advisement.

© 2020 Newsmax Finance. All rights reserved.

   
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Investors are being urged to avoid making hasty decisions after China announced a sharp rise in cases of a deadly new virus that threatens to crimp global economic growth.
nigel green, investors, virus
538
2020-31-27
Monday, 27 January 2020 04:31 PM
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