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Coronavirus impacting global share markets

Coronavirus impacting global share markets

10/3/2020

In recent days, the Australian and global share markets have responded to the spread of coronavirus outside of China and to concerns about the impact this could have on the global economy.

Global markets, including Australian share markets, are currently experiencing a downturn as a result. If the outbreak proves to be short-term and soon reaches a peak, the effects on share markets are likely to be limited. However, if the outbreak worsens over the coming weeks, the global economy may be more significantly impacted.

We have enjoyed a very strong rally in the investment markets since the GFC, which has been punctuated by periods of volatility. Still to play out, this may be another relatively short period of financial market turbulence – which we know is to be expected when seeking growth.  Intrust Super’s investment portfolios are well diversified across domestic and global asset classes and, we believe, suitably placed to ride the ups and downs of volatility. In addition, as scary as it can be, market volatility can provide opportunities for our investment managers to identify mispriced stocks, acquire assets at lower prices and position for market recovery.

Whilst its too early to predict the full effect of Coronavirus on the global economies, share markets have already been significantly impacted. With disruption to the education, luxury goods and tourism sectors, and of supply chains across the board, these factors will likely flow through to investor returns at least in the short term.

Superannuation funds such as Intrust Super have proven to be highly resilient during global disruptions such as SARS in 2003, Zika 2015 and Ebola in 2018, with impacts on account balances being relatively short-lived. This is potentially due to the well-balanced asset portfolios, and the longer-term focus of superannuation investment strategies.