The economic shudder of the COVID-19 pandemic has led most investors to lose money, many to assume a holding pattern, and a large amount to pull back on investments in low-income countries. The necessary containment measures, applied to slow the pandemic’s spread, together with lower global demand have had a significant impact on economic activity all around the world. Economic shocks, market instability and uncertainty typically resulted in conventional stance from investors.
“However, Bad times are best for investment.” This is one of the reasons that Warren Buffett is one of the richest men in the world. He has consistently capitalised on bear markets by investing more during those declines while others have been fearful. Some investors say that they are still looking for new investment horizons to generate some moderate returns for their new investments while others are trying to offset their losses due to an unpredictable stock market, inflation expectations, and city lockdowns amid COVID-19.
So, the question arises whether investment in climate supports investment ideology? In Pakistan, the government is trying to provide a conducive investment environment and keep the steady level of support to the economy through different interventions. In response to the COVID-19 crisis, the Government of Pakistan has taken swift action to halt the community spread of the virus and introduced an economic stimulus package aimed at accommodating the spending needed to tackle the health emergency and supporting economic activity.
With the COVID-19 pandemic, businesses face increased economic disruption and uncertainty. Creating a risk management task force and a solid risk management programme to manage current and emerging risks is crucial to a prosperous future for both the organisation and its people.
Affordable properties continue to remain the top choice of maximum property seekers. Three out of four home seekers prefer to buy properties priced within Rs 90 lakh budget. Naturally so, multiple government incentives for affordable housing has upped the game for this budget category. However, it is also likely that many buyers would have actually reduced their overall budget for property purchase due to Covid-19 as they would not want to lock-in a large amount of money in such uncertain times.
Throughout the early stages of the COVID-19 pandemic, gold was a staple of global finance Institutions around the world; stockpiled bullion was an insurance policy against the unknown. Accordingly, the gold performed well as a financial safe haven. Ultimately, conventional wisdom proved correct―gold’s value appreciated during a period of extreme uncertainty. However, there are many reasons why people are buying gold such as in the form of strategic investments, offsetting losses, in the form of jewels and high-quality products and many others. Silver, despite record retail investment, has sunk to its lowest price in 11 years due to lower industrial demand.
Spurred by the growing fear that COVID-19 will continue spreading globally and disrupt supply chains, the stock market turned in its worst week in more than 11 years. When the curtain closed, Dow Jones Industrial Average fared the worst, losing 12.4 percent. Interestingly, the more volatile tech-heavy Nasdaq Composite performed the best, comparatively speaking, and lost 10.5 percent last week. Meanwhile, the benchmark S&P 500 shed 11.5 percent of its value. We have to go back to the near collapse of the US financial system in October 2008 to find a worse one-week performance, on a percentage basis.
Fundamentals only explain a small part of the stock market variations at the country level. Overall, it is hard to deny that the links between stock prices and fundamentals have been loose at best. Paul Krugman (2020), a person whose remarks are always regarded as investment wisdom for the investment world quoted, “Be fearful when others are greedy and greedy only when others are fearful.” So, it is investors’ choice whether they want to be fearful or greedy in the current circumstances of COVID-19. The performance of the Pakistani stock market has been influenced as a result of COVID-19 positive cases, fatalities and recoveries. Findings of the study indicate that only COVID-19 recoveries have influenced the performance of the market and positive cases and fatalities are not relevant in the given case. The fluctuations which have been observed in the Pakistani stock market during the first half of 2020 are subject to some other variables. A study has been performed and findings of the study advocate that only COVID-19 recoveries are a strong predictor of the performance of the stock market and positive cases and fatalities have a non-significant relationship with the performance of the market. Further studies can be performed by incorporating other variables such as economic growth, interest rate and inflation rate along with the COVID-19 related variables at a cross country level. For those fortunate enough to receive a steady paycheck amid the coronavirus crisis, now might be a good time to cautiously strategically consider investing only available liquid funds in the stock market.
During the risk management process, organisations have a tendency to get overwhelmed and leap into action without consideration. Prioritising risks will help to clear up the fog and stay focused.
COVID-19 disruptions reveal not just vulnerabilities but opportunities to improve the performance of businesses. Business leaders will need to reconsider which costs are truly fixed versus variable. Decisions about how far to cut operations without loss of efficiency will likewise be informed by the experience of closing much of global production. Technology adoption will be accelerated to improve e-operations, e-learning, e-commerce etc. As a financial expert my advice would be, never day-trade with money that you cannot afford to lose.
Shaheryar Hashim
The writer is a Chartered Financial Analyst (CFA) and business management professional.
