9 апреля 2020 г.

CFA Association Russia continued a series of online presentations on April 7, 2020. The society was joined by Andreas Bickel, PhD, a portfolio manager with over 25 years of experience, who lead investment departments of Goldman Sachs, Rothschild Bank and currently is CIO of Blackfort.

During the current times of global uncertainty, Andreas shared his thoughts on investment strategies. Of course, nobody knows exactly how the COVID-19 pandemic will develop in the near future; but considering Andreas’ experience and successful track record, he might be one of the few people whose opinion is worth paying attention to when it comes to investing.

The financial markets are experiencing severe volatility. The MSCI index, for example, which was one of the best performing equity markets in the world up until mid-January, went straight down over the past couple of months.

“This isn’t only because of COVID-19, of course, but other things, like the oil shock and other crises,” said Andreas and added it’s important not to mix it all up.

Many clients from Russia and the CIS are invested in corporate bonds, which had narrow spreads. Before the COVID-19 crisis, the outlook was modest, but looked decent overall.

“What we see now, spreads have exploded,” said Andreas, adding that this very unusual and was caused by the panic as a result of the virus.

In Andreas’ opinion, the coronavirus pandemic may have several stages of infection. The virus won’t disappear altogether, it will come back, perhaps with the least severe consequences in the future; nonetheless, the world will have to deal with it more than once.

His key message here was that currently financial markets aren’t considering the second, third and other waves of infection, simply focusing on the behavior of the Delta right now.

What makes the current situation in the financial markets particularly severe is that even before the coronavirus induced crisis, the levels of the M2 money supply was almost at the levels of 2008.

“Even before there was a huge problem in the system… banks weren’t lending money to each other and the Fed had to step in,” Andreas said.

So, what is there for investors to do? Not long ago, Morgan Stanley, for example, was recommending buying the dips, assuming that the low prices will hold and the capitulation event has already happened.

Having worked at Goldman Sachs Wealth Management in the past, Andreas also talked about their strategy. Their advice is to start buying large-cap US equity and stay away from small-cap companies, emerging markets and European securities. Further downsides are possible and investors should use them as buying opportunities, the speaker said.

“Forward looking, I’d say equities probably offer the best risk return, although volatility is high,” Andreas said.

At the end of the day, however, nobody knows how the markets will end up performing. The important question remains whether or not the world will see multiple waves of the COVID-19 infection. And if so, how many. With the Spanish flu, for example, the financial markets dipped after the second wave of infection. If history repeats that means the market will drop down further.


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