It has been a very bad week for the share markets this week, at the moment the world is coming to grips with this new virus, and the economic impact it is having. At the moment this is unknown so the markets are reacting very negatively to this.

The spread of the novel coronavirus (COVID-19) continues to
escalate outside China despite the concerted efforts of many governments,
communities and the World Health Organisation (WHO). Overnight 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 this morning 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 a bear
market territory (a fall from a recent high of over 20%) and quite reasonable
people are worried and looking for guidance.

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 but 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, while 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
long term strategy has in the past been a proven process.

Finally, 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.

And, as always please call me if you want to have a chat
during this time, be assured I am keeping on top of what is going on at the
moment and will continue to monitor the situation closely.


Stephen Grabowski