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Covid-19 recession will change the way we invest

16 March 2020

A recession trigged by Coronavirus is now imminent and will change the way society does business and invests, according to founder of deVere Group Nigel Green.

Following further sharp drops across global indices, consensus has grown that a global recession is now almost guaranteed, as governments and central banks attempt to limit the impact. The US announced a further interest rate cut on Sunday 15 March, marking its second emergency measure this month.

Green said: “Any way you look at it, it’s now almost certain that there will be a coronavirus-triggered recession as both global supply and demand are impacted. We can expect this recession to be deep but short. The slowdown will be temporary because it’s not caused by deep-rooted problems and imbalances in the economy, rather by a wholly unexpected shock that’s gripped the world.”

He continued: “Every recession produces a new world. This one will too. A Covid-19 recession is likely to fundamentally shift how we live, do business and invest.”

As we move towards a an era of negative interest rates, Green said equities will receive a boost and “savvy investors” will seek to top up their portfolios by “drip-feeding new money” into the market at this time, as cash deposits no longer hold the same appeal.

For Green, the coronavirus will have a positive impact on the so-called Fourth Revolution, with new technologies such as artificial intelligence and mobile supercomputing gaining traction.

He added: “New industries will emerge and, of course, there will be winners and losers.  This will mean job losses in some sectors and huge, possibly unprecedented, job and investment opportunities in others.

“Enforced social distancing will highlight how families, friends and colleagues can interact, remain connected and work, how businesses can still efficiently operate, and how investors can manage assets via advancing digital infrastructures. The disruption and shifts will underscore that we live in a time of great capabilities and great promise.

“But to build and protect their wealth as the world adapts to a new era, investors should be revising their portfolios to mitigate risk and take advantage of the opportunities.”

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