The impacts are being felt right across the board, near and far. Firstly on a note close to home I have kept an eye monitoring, and juggling, some of the funds that I have investments in as it was clear there were the inevitable, and significantly large, drawdowns and redemptions by shareholders during the first quarter of 2020 in some.
Of note one particular fund, shortly after I moved my investment, announced that the board had considered all impacting events and concluded that it was no longer economically viable to maintain the operations of the fund, and as such, the directors resolved to terminate the fund. So it pays to keep a daily or even hourly watch time-frame on investments these days.
On a somewhat less personal note the pound, carrying on from the Easter increase got slightly stronger supported by the news that the UK Prime Minister was out of intensive care and recovering well. Whether it will continue this minor trend will depend very much on any announcement today on the outcome of further Brexit discussions taking place between negotiators of the UK and the EU for a timetable on the next round of talks.
Meanwhile, in the UK, we have reports of political infighting between the so-called ‘doves’ and ‘hawks’ as to how much longer the lock-down period should be imposed for, with the former advocating a continuance throughout May and the latter group pressing for an early release at the start of May.
The obvious concerns driving these internal discussions are both the economic and health impacts. There are also very real concerns that if the economy and sterling values drop to even more damaging levels then China, who are generally agreed to be the root cause of the pandemic, would have the opportunity to acquire UK assets at a fraction of their true worth.
Estimates of the cost of the UK’s shutdown range around £2.5 billion per day which begs the obvious question, and the paramount concern for the politicians and the economists alike, as to how long the UK can sustain such losses and then still be able to revive the economy out the other side of the lockdown.
To get a clearer idea, and to put things into a little more perspective as to the scale of the global economic downturn you just have to look at the financial plans readied by some of the world’s major countries in comparison to their 2019 GDP as described in the following table:
||% Of 2019 GDP
So yes, right now covid-19 definitely rules the financial markets and will continue to do so for the foreseeable future.