LGT Vestra Market Update - 18/3/20

Wednesday 18 March, 2020

Global stock market movements over the last week have been unprecedented and nothing short of dramatic. The sell-off of shares around the world has been heightened by the measures governments are imposing for entire nations including the lockdown by the Italian government, the draconian measures announced by President Macron in France last night and the new tightened measures introduced by the British Government. Not to mention the growing problems faced by the US and elsewhere around the world in response to the pandemic. With this backdrop, LGT Vestra, has provided a simple and straightforward analysis of the current investment landscape, their views as to how the market might behave in the short-term and why it is important to remain calm and remain invested.

Investment landscape

The continued spread of coronavirus and the wide-scale quarantining across the world has led to fear over reduced global demand and disruption of supply chains. The impact of this was compounded by disagreements last week between OPEC members, leading to the oil price falling from $60 a barrel at the start of the year to around $30 today.

Market analysis

Equity markets have fallen dramatically in response to these events and for the most part, indiscriminately. Some sectors have been hit harder than others such as energy and smaller companies which have led the sell offs, as well as those companies with complex supply chains and businesses reliant on discretionary consumer spending.

It has become clear that the impact of the virus is likely to be with us at least for the medium term and in response, consumers are likely to save rather than spend in the face of adversity and uncertainty. The concern for investors is that this develops from a health crisis to a liquidity crisis and beyond.

We all know that markets fear uncertainty and the global economic impact and the threat of recession is an unknown. However, what is becoming clearer is that we are beginning to witness a sustained and co-ordinated response from governments and central banks, such as the Bank of England and the Federal Reserve in the US with fiscal packages and a cut in interest rates. We anticipate that this over time should support markets.

Remaining calm

Whilst this current situation is undoubtedly worrying over the short term, we continue to remain committed to investing for the long-term prospects of the LGT Vestra/Lonsdale model portfolios. We would urge caution and restraint in these volatile conditions and do not recommend any change to your investment strategy that you have agreed with your financial adviser, in light of recent events. We are investing in line with your risk profile and time horizon and as such, we would recommend that you remain invested in accordance with this, rather than to sell out, realising losses.

Important information

This communication is provided for information purposes only and is intended for the exclusive use of the recipient to whom it has been directly delivered by LGT Vestra LLP and is not to be reproduced, copied or made available to others.  The information presented herein provides a general update on market conditions and is not intended and should not be construed as an offer, invitation, solicitation or recommendation to buy or sell any specific investment or participate in any investment (or other) strategy.  Past performance is not an indication of future performance and the value of investments and the income derived from them may fluctuate and you may not receive back the amount you originally invest

Although this document has been prepared on the basis of information we believe to be reliable, LGT Vestra LLP gives no representation or warranty in relation to the accuracy or completeness of the information presented herein. The information presented herein does not provide sufficient information on which to make an informed investment decision. No liability is accepted whatsoever by LGT Vestra LLP, employees and associated companies for any direct or consequential loss arising from this document.

LGT Vestra LLP is authorised and regulated by the Financial Conduct Authority.

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