Putting more into the stock market while the country is on the brink of national health crisis and the economy is on lockdown may, understandably, feel like the last thing you want to do. Governments and central banks are implementing ‘whatever it takes’ strategies to prevent an immediate recession turning into an outright depression and entire industries in the UK and parts of Europe and the US have been shut down. We don’t know how long it will take for western countries to get Covid-19 under control, or how long it will take for economies to recover.
But what we do know is that markets are significantly cheaper than they were last month. The Dow Jones Industrial Average, Euro Stoxx 50 and FTSE 100 have all shed over a third of their value since their 2020 peaks in February. The MSCI World All Cap index dropped 27 per cent between 20 February and 23 March. For long-term investors, this should present attractive growth opportunities. And with companies racing to produce a vaccine for coronavirus in record time and infection rates falling in worst-hit countries such as China and Italy, there are reasons to be optimistic.
“We’ve seen almighty pullbacks from the highs of late January and early February and there may be more to trim off the market but we will get through this,” says Andy Parsons, head of investments at the share centre. “Given the unbelievable measures the government has put in place there is reassurance that companies will be supported and prices will come back up.”