The problems related to the coronavirus outbreak have grown worse. At the end of January, it became apparent that the coronavirus outbreak would have a major impact on the global economy. The restrictions imposed by the Chinese government to stem coronavirus were too stringent to think otherwise. Towards the end of February, it became increasingly clear that many other countries would have to prepare for a similar scenario. Only at this point did the financial markets begin to react to the risks that emerged.

After a sharp rise in the number of cases in Switzerland, public life has also increasingly ground to a halt here in recent days. This has heightened awareness of the crisis – whether because of confirmed cases in people’s own circle of friends or because of a clearer picture of the impact that the measures taken will specifically have on large and small companies and the self-employed.

There is no question that all of the measures taken are necessary to restrict human suffering from the disease. Many companies face difficult decisions in light of the steps taken. A fall in demand from abroad and domestically, disrupted supply and production chains, shop closures and prohibited services – the combination of these various factors make the situation difficult to cope with.

Life will go on after the coronavirus crisis

With developments coming thick and fast, there are two risks. On one hand, the impact of the problems on the global economy may continue to be underestimated. On the other, there is a risk that – faced with such extreme scenarios – people will forget that the world will go on after the coronavirus crisis.

This risk also applies to investors. Until recently, the extent of the crisis was underestimated by many of the financial market players. This is now changing, and the upshot is a historic slump in prices. Does this mean that now is the time to take advantage of the low prices to purchase equities and build up risk?

It’s not yet time to enter the market

We remain sceptical. Even if the coronavirus is brought under control over the course of the year, there is a huge risk that the shock triggered will result in far-reaching problems for the economy. The cocktail of risks simply seems too potent, with record levels of corporate debt worldwide, an energy sector that has to contend with the huge slump in the oil price, many small and medium-sized companies facing unprecedented challenges, liquidity problems on the dollar market causing the US central bank to undertake massive interventions and heavily indebted countries having to take on more debt. As a result, we continue to adopt cautious positioning for the portfolios under our management.

More importantly though, we hope that the measures implemented worldwide achieve the desired effect and restrict human suffering.