16th April 2020
Given the past few weeks market movements we felt it is important to keep you informed with our views on the current situation and what we as a company are doing to ensure that you and we are well placed to weather this economic shock.
The impact of Covid-19 has seen the largest short-term fall in global growth since the financial crisis of 2008, this has sent shock waves through the equity markets with very few safe havens except cash.
Equity markets are always looking in advance at company earnings, currently the expectations are seen by some analysts to potentially drop by some 25-30%. Given the sheer uncertainty of the situation, potential disruption to supply chains and global trade in general markets have fallen by similar levels.
On the 9th March we saw the oil price drop by over 30% due to indifferences with Russia and Saudi Arabia where the latter has dramatically increased the production of oil at a time when demand is rapidly falling and there is a glut in the supply lines. This has exasperated an already turbulent market, the move is seen as strategic with little regard to the consequences of other oil producing nations. Cheap oil has done little to settle the markets and will harm efforts to drive economies to a more sustainable energy model in the near future.
The markets have recorded record levels of volatility, which have been compounded by the lack of a global co-ordinated response which we saw during the global financial crisis, countries have effectively taken their own decisions without due consideration or consultation of the impact it will have on other nations. This now appears to be changing.
Many nations have brought in tough new measures to stop the spread of the virus, along with economic packages set to help individuals and companies get through these unprecedented times.
China and South Korea appear to have got control of the virus and the number of new cases are some of the lowest since the outbreak back in January. Therefore there is hope that this can be contained and within a relatively short period of time with the right action being taken by Governments.
P J Aiken Perspective
We understand these are troubling times with the markets hitting the headlines in a negative way over the past few weeks. We do believe this is short term issue, economies have effectively hit the pause button and given the recent stimulus packages announced by Governments, the equity markets have steadied and recovered a little ground. We appreciate that equities won’t go back up as quickly as they have come down, that said, never underestimate the power of positive sentiment once this virus is brought under control.
The portfolios we have created are bespoke, and we know they will of course have dropped over the past few weeks, however due to the diversification we have built in with every portfolio the falls have been at least tempered.
Contingency Plans at P J Aiken
In summary we are in difficult and unprecedented times. The Covid-19 Pandemic continues to evolve at pace and while we are keeping an extremely close eye on the latest government guidance, we want to assure you that P J Aiken is fully committed to the health and well being of our staff and clients and that we will be doing everything we can to minimise disruption to client services.
As a final note, whilst it has been a rather unsettling 1st quarter of 2020, please try not to worry too much, perhaps skip the news and if you have concerns please call the office and one of our advisers will be happy to discuss your concerns and hopefully provide some further reassurance.