The sell-off on global stock markets, after coronavirus fears triggered the largest one-day fall on many global indices – including the FTSE and the Dow Jones – since the “Black Monday” market crash in 1987, will ease as liquidity measures are rolled out, according to a leading financial advisor.
Nigel Green, the chief executive and founder of deVere Group, warned that some investors will even make a fortune from the volatility.
“Global markets were thrown into turmoil on Thursday as fear gripped investors over the jump in confirmed coronavirus cases and as governments around the world introduced measures to try and halt the spread, which contributed to the panic,” Green said.
“All assets – even safe-haven ones such as gold and Treasuries – were being shed in order to shore up cash reserves to meet margin requirements. This was a temporary phenomenon.”
The deVere CEO said that whilst some volatility will remain as no-one can truly know where the bottom is due to the unpredictability of this public health crisis, the global sell-off will ease as central banks roll-out liquidity measures.
Earlier in the week, he had predicted that markets had been looking for good reason to return to being bullish – which has been their default position for an unusually long time – and actions being taken by central banks could provide just that in days to come.
“We expect global stock markets to have recovered significantly before the year-end,” Green had said.
On Friday Asia-Pacific markets staged sharp recoveries, European and U.S. ones are expected to follow suit, with Green explaining that the coronavirus is an unprecedented public health crisis, with many tragic consequences that cannot and should not be underestimated or dismissed.
“It has spooked the markets to historic levels. Yet many investors will use the temporary volatility as important buying opportunities, with some set to make a fortune from the turbulence,” he said.
“Fluctuations can cause panic-selling and mispricing. Sought-after stocks can then become cheaper, meaning investors can top up their portfolios and/or take advantage of lower entry points. This all typically results in better returns.
“A sensible fund manager will assist investors to seek out the opportunities that turbulence creates and mitigate potential risks as and when they are presented.”
The deVere CEO concluded that as ever in times of market volatility, “many investors will be using the fall-out of the coronavirus outbreak as a chance to generate and build wealth.”