DAVID THOMSON – The medium and longer-term impact of the Covid-19 coronavirus pandemic

Now that the initial panic has subsided, investors are turning their thoughts to portfolio fine-tuning or perhaps even radical restructure as they seek to capitalise on a possible “new normal”.

For now, there is no definite end in sight to Covid-19. The longer it goes on, the more profound its long-term impact will be on the economy. However, amid crises, there are often opportunities. Investors may be forgiven for worrying about the obvious disconnect between the current weak economic news and the apparent strong market rebound. However, markets typically look ahead and now perceive that governments and central banks have their backs in the short term, freeing them to focus on the longer-term winners and losers.

Having observed the performance of different assets in recent weeks, investors are also starting to perceive themes and trends that will help them make their decisions. When markets are volatile, investors typically retreat to assets that hold their value. For example, healthcare stocks have been a major beneficiary of the pandemic since typically not only do they hold their value, but it seems likely that both governments and the public will spend more on healthcare in the future. We may also see areas of the economy such a gyms and wellbeing benefit from this trend.

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