4D update on COVID-19
11 March 2020
We believe the coronavirus issue will pass, but not without obvious and significant personal and economic pain including its impact on global growth.
In terms of our own portfolio, we are not rushing anything and certainly not chasing the market. In fact, the equity market sell-off has provided us significant opportunity to access high quality infrastructure assets at attractive valuations – in line with our philosophy of always looking to own quality businesses at the right price.
We are also:
- updating our macro outlook for both coronavirus and lower commodity prices – we are expecting at least a couple of quarters of global economic weakness
- continuing to stress test models for the global economic impact of the coronavirus as well as regional quarantines and the fall in commodity prices (modelling worst case scenarios)
- prioritising quality names with strong management teams and strong balance sheets
- looking for earnings resilience in an uncertain economic environment – utilities are now offering attractive value (historically have been over-priced), are immune to economic shifts and benefit from lower interest rates and lower commodity prices
- considering stimulus and how that will impact global growth outlooks, and
- considering stocks that have been significantly over-sold – while they may be subject to near-term volatility, the valuation is just too cheap to pass up.
More detail, including current high quality investment opportunities presented to us, can be found in our February monthly report.
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