COVID-19 & Market Update

As you are all aware, the spread of the novel coronavirus (COVID-19) continues to escalate worldwide, despite the concerted efforts of many governments, communities, and the World Health Organisation (WHO). Last week, the WHO declared COVID-19 as a global pandemic. This is the official recognition of the severity and risk the disease poses to the global population.

There has been considerable commentary comparing COVID-19 to the normal Flu season, and while on the face of it the fatalities are not markedly different, COVID-19 is proving to be very contagious and has a significantly higher mortality rate with the old, the infirm, and the very young. So, while the risk to the young and/or healthy is well below 1%, it is the contagion risk to the more vulnerable groups of society that has exacerbated the risk posed by COVID-19 and hence the magnitude of the global response. In addition to the declaration of COVID-19 as a global pandemic, President Trump’s announcement banning all travel from mainland Europe to the US for 30 days, and the overall panic-driven behaviour in our society, further contribute to the potential large-scale impact of COVID-19.

The rapid spread of the virus and the escalation of the containment measures, such as the ongoing closure of workplaces and schools, the imposition of travel bans, and other related restrictions, have already had an economic and social impact. Developed world share markets are now in bear market territory (a fall from a recent high of over 20%) and, quite reasonably, people are worried and looking for guidance.

As we have stated in previous communications, we have no crystal ball; and after two weeks of heightened uncertainty there is no apparent end in sight. But this will end at some point, though we expect it to get worse before it starts to get better — but get better, it will.

Many are worried about the capital in their portfolios and that is completely understandable. There is no doubt that, in aggregate, corporate earnings have been negatively impacted by this event. Market reactions have, in part, reflected this, though also expressed the panic and fear of many investors. What history has shown us from an investment perspective is that holding the course at times like this, whilst uncomfortable, has, over the longer term, proven to be a good strategy. And in the absence of reliable foresight, we believe — as uncomfortable as it is at this point — maintaining your strategy and rebalancing to your respective risk profile asset allocation remains appropriate, as it is a proven process.

We hope that you and your loved ones manage to avoid COVID-19; and that our community and markets can return to normal as soon as possible.

Meanwhile, internally, our key priorities are:

• the health of our staff and our clients; and
• maintaining the quality of our service delivery.

Please be reassured, that if our staff show any symptoms, they are required to self-quarantine. On site, we have implemented enhanced hygiene procedures to limit the spread of the virus.

You may be aware that Jason Cook and Despina Cook recently completed a week-long charity bike ride in Vietnam for Multiple Sclerosis. The trip was challenging, and a great success — the team of 18 cyclists raised over $100,000. Whilst there were no Australian Government warnings for Vietnam upon departure other than to exercise usual precautions, this rapidly changed on the day of arrival back into Australia to a Restricted Travel warning. Whilst isolation for them is not mandatory given the timing of arrival, they have both consciously chosen to self-isolate as a responsible course of action to the community.

Our staff has remote access and can continue to work productively from home, where necessary. Similarly, meetings can take place via Skype, Zoom, or GoToMeeting, wherein face-to-face meetings are not essential.

Whilst we are required to respond to the current challenges through the use of technology, the personal nature of the relationships we have with you, and the quality and care of our service, remains our top priority.

If you have any questions, please contact me. I always welcome the opportunity to talk about how we can support you and your family.