As the coronavirus spreads, with over 50 million people reportedly on lockdown in China, investors should avoid making “knee-jerk” decisions, the chief executive of financial advisory firm deVere Group has said.
Nigel Green is one of several market commentators calling for calm after stock markets have fallen and the death toll related to the virus jumped to 81 with nearly 3,000 people confirmed to be infected.
The composite European Stoxx 600 fell 1.7% at the market’s open; London’s FTSE 100 dropped 1.6%, while Germany’s Dax was 1.7% lower.
The slump followed a similarly dramatic decline in Asia overnight, according to deVere Group. The Shanghai Composite fell 2.7%, the Hong Kong Hang Seng lost 1.1%, and Japan’s Nikkei dropped 2%.
“The Coronavirus is the number one threat to financial markets currently as global investors are becoming jittery on the uncertainty,” Green said.
“Whilst 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.”
Green added: “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.”
Adrian Lowcock, head of personal investing at investment platform Willis Owen, called the situation serious.
“Fear of the unknown is impacting on stock markets worldwide,” Lowcock said. “In such situations investors frequently react first, take flight and then only return to the market once the situation has calmed down and markets have recovered.”
He added: “The key is to stay calm and remain focused on your objectives and wait until you are fully informed before making any decisions.”
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