PFA warns investors not to panic over coronavirus

Danish pension provider, PFA, has warned investors not to panic over the impact of coronavirus on financial markets, as it believes the declines seen are “temporary”.

The spread of coronavirus is having an impact on stock markets; earlier this month it was reported that Dutch pension funding levels had dropped due to the spread of the virus.

Following the news of more cases in Europe, European stock markets fell as much as 3-4 per cent on Monday (25 February), despite Asian markets stabilising, PFA said. However, PFA chief strategist, Tine Choi Danielsen, has said that the “declines are temporary” and markets will recover in the coming days.

“As long as the uncertainty about the spread of disease is present, one must be prepared for the markets to surge up and down, and for the long-term investor, it will not be worthwhile to try to time the ups and downs,” she said.

She explained that, as an investor, you rarely hit the top and bottom of sales and purchases, and thus risk missing out on the days when the markets increase most when the risk mood disappears.

“As a longer-term investor, you must stick to your investments. For example, the declines are broadly founded on the Danish stock market, so even companies that have no exposure to the closure of both Italian and Chinese cities/areas are pulled down by the negative sentiment, including banks and utilities,” Choi Danielsen noted.

She added that uncertainty is particularly high in specific sectors and companies, as turnover and earnings are expected to be adversely affected depending on how long the closure of cities and factories lasts.

“This is especially true in the transport, energy and tourism services sector,” she said.

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