116* UK listed companies have now warned of the effects of the coronavirus in their stock exchange announcements, says Bowmore Asset Management, the asset managers.
The number of companies warning of the increased risk the coronavirus poses has more than doubled over the last week to 60, up from 28 the week before and just ten four weeks ago – see graph.
So far, relatively few UK companies have actually quantified the impact on their earnings. Diageo recently announced that it is expecting profits to be as much as £200m lower this year due to reduced sales in key Asian markets.
Bowmore Asset Management says increasing concerns over the effects of coronavirus over the last 10 days has caused a significant shift from risk assets into ‘safe haven’ assets. The yield on ten-year Treasuries has already fallen by 30 basis points** over the last week, whilst global equity markets have endured their worst week since 2008.
Bowmore Asset Management adds that, although markets have fallen, lower share prices can provide opportunities for deploying investable cash at a more attractive level. Investors should look at which areas of the market could be poised for a recovery, so that when sentiment starts to turn, they are ready to buy back in.
Charles Incledon, Client Director at Bowmore Asset Management, says: “Investors with a long-term horizon need to avoid the temptation to exit the market.”
“Past corrections show that big sell offs are followed by rallies that quickly make back a large amount of the ground that has been lost; however, it is hard to time that.”
“Some sectors that may be more heavily sold, such as oil & gas and travel, could present real opportunities to buy at significantly lower levels.”
116 UK listed companies have warned of coronavirus effects so far – including 60 in the last week