Citylife > Press Release
  Home Contact us Add to Favourites
Most Recent Postings
More Press Releses
Featured Sections

Event Finder
A daily roundup of exhibitions, promotions and other events in Dubai and the rest of the Emirates.
Submit an Event
Latest Dubai Press Releases >> Healthcare and Medicine


By Edris Alrafi, Head of Middle East and Africa, Aberdeen Standard Investments


Dubai, United Arab Emirates, April 19, 2020:   Financial markets are attempting to price in a rapid and unprecedented series of shocks to the world economy. The net result has been the fastest bear market in the history of equities. Should investors buy or sell even at these depressed levels for the FTSE100? 
To answer such a question, we need to know several facts. Firstly, will public health measures, especially the creation of effective vaccines, bring this pandemic under control within a few months? Unfortunately, most experts emphasise the impossibility of knowing an answer at this stage. 

Secondly how effective will the monetary and fiscal responses be from governments around the world. Clearly, many economies will experience a short, sharp recession. The shut-down of so much travel and entertainment, so many shops and borders, will ensure that is the case. The key issue is how long will the recession last. Unlike the 2008-09 banking crisis, this is a widespread demand and supply side shock. Central banks have responded aggressively, with sizeable interest rate cuts plus a series of measures to ensure banks continue to supply credit to their borrowers.


This is necessary, but not sufficient. Many households and businesses, small and large, will need cash flows to keep them afloat and prevent bankruptcy or default. Measures to support local restaurants or nationwide cinema chains will necessarily be different to car parts suppliers or national airlines. Politicians are slowly preparing the country for a really major expansion of government debt; we saw the early indications in the UK Budget a few weeks ago. Examples could include faster benefit procedures, more sick pay, holidays for business rates, long-term company loans. 

What do market valuations tell us? Bond markets are pricing in close to zero interest rates and weak inflation for the foreseeable future. This makes considerable sense; politicians should focus on debt servicing rather than overall debt levels. Equity markets are pricing in a recession, but clearly could still fall further if the downturn lasts 9-12 rather than 3-6 months. 

Amidst a blizzard of conflicting facts and figures, a few key issues are worth focusing on. The first is the rate of improvement in the COVID-19 statistics. The second is the speed with which governments use their fiscal firepower to support households and businesses - as in war time borrow today and sort out the bill tomorrow. Economic data will be poor for some months but when will signs appear in the economies first affected by the virus, such as China and South Korea, that commercial activity has started to recover. 

Some of the implications for investors are already clear. Profits will take a hit. For those building up a pension pot, it will take time to re-build wealth, as it did after 2000 or 2008. For those relying on an income then suspensions to dividend payments are possible. So, the emphasis should be on searching for quality companies which can survive the pandemic, investment firms who can be dynamic in their decision making, and absolute return funds designed to withstand this sort of crisis. 

Posted by : GoDubai Editorial Team
Viewed 3177 times
Posted on : Sunday, April 19, 2020  
Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of GoDubai.com.
Previous Story : 5 Percent of People Over 60 and 15 Percent of People Over 75 Years of Age Suffer From Aortic Stenosi...
Next Story : HFZA Launches Disinfection Drive to Sterilize its Facilities
Email this article Print this article

Share this article with your friends and followers


Back to Top  
Most Viewed Press Release posted in the last 7 days
Lockdown Showdown: Jaguar I-pace Etrophy Series to Get Back on Track in Berlin i...
Three Eggs get Yemeni National a Guinness World Records Title
Omega's Antimagnetic Tourbillon Is a Watchmaking Breakthrough
Lamborghini SCV12: Squadra Corse Hypercar Ready to Hit the Track
The new BMW M5 and BMW M5 Competition
Toric Tourbillon Slate
GROHE Smart Control Review
Twitter tests Tweeting with Voice
Saxo Bank Launches Loyalty Program for MENA Region Clients
Hyundai Motor and Sony Pictures Entertainment Announce Unique and Pioneering Mul...
American Aesthetic Medical Center Has Something in Store for the Esthetical Figu...
WTTC Launches Safe Travels Protocols for Attractions, Car Hire and Short-Term Rental
NUDESTIX Launches - Nudies Blush, Bronze, and Glow Shade Extension
Volvo Cars Chengdu Car Plant Powered by 100 Per Cent Renewable Electricity
Range Rover Marks 50 Years of All-terrain Innovation and Luxury With Exclusive N...
Under-12 and Over-60 Can Now Take Part in Sports Activities: Dubai Sports Council
Dabur Ensures Safety with Hand Sanitizers and Personal Protection Kits as UAE Es...
Let's Brigthen Up! The Face Shop's Ultimate Summer Skincare Range From Belif is Here!
Handy Helper for Content Creators: The Compact A6100 Mirrorless Camera from Sony...
Pre-orders for Samsung's Galaxy S20+ 5G and Galaxy Buds+ BTS Edition now open in...
Experts Highlight need for Young Talent to Develop Skills for a Post-Covid-19 World
Dabur Launches Pure Organic Coconut Oil: Natural Protection for Hair, Skin, and ...
GEMS Wellington Academy – Al Khail Improves Rating to 'Very Good' in KHDA DSIB 2...
Etihad Airways to Recommence Flights to Athens
Dubai Sees Pronounced Uptick in Demand for Retail Units
Book Building of Amlak International's IPO of 30% of Shares
Sanctuary for the Senses: All-New Lincoln Corsair Arrives with Whisper-Quiet, Co...
Essence Spring/Summer 2020 Collection
Registration Opens for Training On the Camel Trek and Camel Marathon for Expats
Covid-19 Leads UAE Businesses to Adopt Upgraded Green Building Solutions
Dubai Sports Council Discuss Upcoming Sports Events With Federations and Organisers
Dubai Sports Council to Celebrate Dubai's COVID-19 Heroes Through Commemorative ...
Turkish Airlines Was the Busiest Operator in the Eurocontrol Area After Restarti...
Celebrate Father's Day With Parmigiani Fleurier Tondagraph Slate'
INFINITI of Arabian Automobiles presents Dubai Islamic Bank customers Super Sale...
Crude Oil Headwinds on Virus and Technicals
Customers can Benefit from Increasing Gold Rate by just Paying 10% Advance at Ma...
Canadian University Dubai Receives Prestigious Certification in Education for Pu...
Report Reveals the Six Fintech Innovations That Will Boost the ‘Financial Health...
Serco Middle East Appoints New Managing Director for Dubai Metro and Dubai Tram
Big Bang Integral King Gold
Pan Emirates Unveils Exclusive New Collection
Digital Vision Technology Signals On-Track Success for Panasonic Jaguar Racing
Schneider Electric Extends Strategic Partnerships with AVEVA, Lenovo and Stratus...
Celebrate World Music Day with HONOR Magic Earbuds
The 11th Edition of the Arab Fashion Week to Launch Virtually Today, from June 2...
New Bentayga to Launch Beyond100
Cairo Amman Bank Adopts the Latest Technology to Enhance Performance and Securit...
Celebrate Summer Safely with the New, Shopping Normal at BurJuman
Registration open for Dubai Watersports Summer Week