What do you invest in when panic sweeps in?

If the final week of February saw financial markets jolted awake to the dangers of a covid-19 pandemic, the first week of March has seen markets spiral further in red. As a result of the disease outbreak, the past few weeks have seen multi-year high volatility in global markets. The VIX Volatility Index reached its highest level since the Global Financial Crisis (GFC) and its second highest level since the CBOE started publishing this index in 1990. The SP500 dropped by 16% between 19 February and 28 February and last week saw an unprecedented level of volatility in the index. In the UK, the FTSE100 dropped to the lowest level in 5 years and in mid-February saw its largest daily loss since 2008 [1]. On 5 March, The Economist published an article titled ‘Covid-19 will infect the world economy’ and said that while recession is unlikely, it is not impossible.

It would be fair to say that investors and markets alike are on a panic mode. The realisation that global GDP will most probably shrink for part of this year, and the looming risk of a financial panic and credit-crunch, has led central banks to slash interest rates at a pace last seen in the financial crisis of 2007-09.

We have been talking to investors who are already liquidating their equity positions and are looking for alternatives. We have been contacted by investors who are looking to invest in fixed-return property lending.

Make sure you top-up your e-wallet and have funds ready to lend as soon as our next loan is listed. Keep an eye for our next fixed-rate 8-12% return loan coming shortly.

 

[1] Source for all the data in this piece: Market Watch

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