Investment, Business

Coronavirus scenarios: How should investors position?

8 March 2020

Coronavirus scenarios: How should investors position?

In the last Global Risk Radar report, UBS highlighted that investors should not be complacent. Since then, the coronavirus has spread worldwide and global equities have experienced their largest weekly fall since 2008. We would characterize the market response since mid-January as typical “flight to quality” behaviour. While cyclical asset classes such as Japanese and Eurozone equities as well as oil have suffered, the so-called safe-haven assets have benefited. For example, yields on 10-year US Treasuries fell below 1%, the lowest level on record.

While we believe the recent market distortion has created opportunities, it is far too early to declare an all-clear (see CIO alert from 2 March for more details).

A key part of our investment process is assessing the potential paths of current risks and the subsequent market reaction. Out of the range of possible outcomes, UBS has mapped two broadly defined scenarios for the next six to 12 months.

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