How coronavirus will hit finance, pensions and real estate prices
Coronavirus outbreaks plummeted stock market indices, including the Dow Jones. Navagates broker experts answer the frequently asked question like is it worth selling all stocks and what about putting off buying a home. The experts are focused on the UK market. Since 2019, the United Kingdom has launched the process of leaving the European Union, also known as Brexit. Since Brexit significantly affects the trade, economic, financial, and political situation in the country, this process is the determining factor for the local market. However, now the world is shaking by the economic downturn associated with the coronavirus epidemic, and Navagates broker analyzes whether it is time for the British to change their point of view.
What should I do with stocks?
The most reasonable thing you can do in the current situation is to remain calm. Advisers from Navagates broker recommend investors to demonstrate the steel nerves. We need to resist the urge to dump long-term investment assets in the time of a short-term recession. Selling assets now is not the best solution; in this way, investors only fix the losses and lose money where losses can be avoided, according to the Navagates review.
Currently, the events in the Navagates forex market are developing according to the worst-case scenario. But those traders who are used to working with long positions should consider additional financial injections into the market. We are talking about purchasing shares for an unreasonably underestimated price. Warren Buffett likes to say in such situations: “Be greedy when others are fearful.”
Firstly, experts at Navagates forex believe it makes sense to pay attention to government bonds. In developed countries, pension funds keep their financial portfolio in a mix of stocks, government and corporate bonds, and real estate. It is logical that when the price of shares falls, the rate of public bonds increases, as investors switch from one asset to another. So if the FTSE on the London Stock Exchange fell by 10%, then pensions fell by only 6%. This is another argument in favor of pension savings in the investment funds.
Secondly, experts at Navagates broker warn that some gloomy analysts believe the investors are obliged to cache their greatest assets just now. They believe holding assets is too risky at the moment. In their opinion, if a correction soon begins on the market, it will recover 25-30% of stock prices at best. This is not so good, but not the end of the world also, and certainly not the Navagates scam. But if the correction does not begin, then the fall in the indices will make 55-80%, which is much more severe. The fact is the growing global trend has persisted in the securities market for forty years, and many analysts rightly fear a collapse.
Of course, such gloomy forecasts remain in the minority so far. But they have many supporters who are preparing to seize profitable assets in the wake of a general recession. If you study analytics in the navagates.com reviews section, you will notice that such moods work by the method of self-fulfilling prophecy. In other words, the more traders believe in it, the more likely it is that such a scenario will be realized.
What does await for the British retirement savings?
Residents of the UK know that on a specialized site, every British citizen can log in and see what kind of pension will be paid to him or her. By default, retirement savings go to a fund that includes a mixture of stocks and government bonds. But you can go to your personal account on the site and change the settings. If possible, it is better to reduce the number of shares, or even wholly convert the savings into cash. As experts at Navagates broker have already written, when stock prices fall, government bonds begin to rise.
However, experience shows that only a few people outside of Navagates forex are anxious to find the most profitable investment assets. Perhaps most people really should not reform the pension investment portfolio. The citizens who rely only on a state pension should better inquire about their prospects to access their pension savings in different situations – after raising of the retirement age, the problem in the company, and so on.
As you know, the British receive two types of pensions - state and corporate. The state pension is paid from pension contributions that a citizen pays for a whole life. The corporate pension is paid by the employer – in the case when the pension program is provided. Navagates review suggests that after Brexit is completed and the financial system of the country is reorganized, pensioners may have other kinds of difficulties. For example, employees of foreign corporations may encounter problems because of the mess with the accounts. They should better ask the HR department about the organization of pension accounts in the future, after retirement or in case of problems with the company.
What stocks may go up in the near future?
During the market volatility, investors behave differently, depending on their strategy. Fans of short positions are looking for stocks with a price moving against the general trend. Investors who used to play long, focus on stocks that have lost a part of the value, but in the future should grow again - perhaps even higher than the start level. Navagates analysts report that this is not a scam, but a conscious strategy of the trading against the trend.
No matter how cynical this may sound, the Navagates broker review reports that at the London Stock Exchange, the shares of the only funeral company Dignity plc are in the highest demand. These stocks are rising in price, while everyone else is falling. In just one trading day, the price increased by 9%. Ocado, a food delivery company, and PZ Cussons, the owner of Carex, a brand that manufactures hand hygiene products, are also doing well. These stocks are resisting the general trend.
But what should the long-player buy during the market collapse? Navagates broker experts suggest paying attention to airline stocks. IAG, the owner of the British Airways brand, has dropped from 642p to 425p in the past few days, while shares of Ryanair - low-cost airline - have fallen from € 15.30 to € 11.20. For those who believe that the crisis will end soon, these two stocks are the most obvious candidates for investment.
Don't forget about the famous market saying – "don't try to catch a falling knife." If you study analytics on navagates.com reviews, you can find exciting parallels that tell you how to proceed. For example, during the last crisis in 2007-2008, some investors bought up the shares of promising companies when they doubled in price. But some of them, such as Northern Rock, fell to zero, companies went bankrupt, and speculators lost everything. Perhaps the most sensible advice, in this case, is not to put all your eggs in one basket and not to invest all available money in stocks of only one company, no matter how promising it seems.
Does it make sense to withdraw cash investments and keep them under the mattress if things go really bad?
Do not be stupid. Even in the UK, and also with the right insurance, if you are robbed, the insurance company will reimburse you no more than £ 1,000. Navagates broker review reports that 9 out of 10 apartment thefts in the UK remain undisclosed. It became possible after changes in the legislation. Now the law allows the police to close such cases in the absence of a suspect. Worse statistics of disclosures exist only for the theft of bicycles. In other countries, things are not better: the criminals rob even the most reliable safes, saying nothing of the ordinary citizens’ houses.
So when storing money under a mattress, the risk of losing everything is higher than a bank deposit. Even during the past financial crisis, when the major British banks faced challenging times, there was no urgent need to keep cash at home. And now banks are feeling much more confident. The coronavirus epidemic will certainly not lead to the collapse of large banks. In addition, bank accounts in the UK are protected by a deposit insurance program with a limit of £ 85,000.
By the way, to convince you, Navagates broker reports the following fact: the coronavirus can also be transmitted through banknotes. In China, for this reason, a considerable amount of cash has already been withdrawn from circulation. And it’s even scary to think how many people touch the buttons of an ATM. But do not panic: the risk of contracting this way is shallow. However, the transition to cashless payments shortly will be a reasonable choice.
Will the British be able to travel abroad if the pound collapses?
GBP in the forex market in recent days is in a fever. Two weeks ago you could buy € 1.20 for one pound, but now the rate has fallen to € 1.15, and this is not the end of the fall, Navagates forex experts are convinced. On the other hand, the problems of the pound associated with Brexit are fading amid general fears over the impending epidemic. Oddly enough, but the pound, which has only lost value over the past two years, now looks more attractive to investors than the euro.
The good news is that now the sterling rate is still higher than last summer. Recall that last summer, the sterling rate broke a two-year record of decline due to the no-deal on Brexit between the UK and the EU. Experienced Navagates broker review traders say that further depreciation of the British currency against the euro is hardly possible, taking in attention the problems in the European economy. The economy of Europe, especially Germany, is export-oriented, so it is very vulnerable to a decline in global demand.
Among the major currencies, not the pound, but the euro is in the most vulnerable position. The ties of the European economy with China are so strong that even the theoretical gap in trade chains immediately affects the exchange rate of the European currency. Since December 31, 2019, the euro has fallen in price against the dollar by 1%. Despite the fluctuation of the British pound, it looks more attractive compared to the euro, as the British economy is more oriented to the services sector than to manufacturing. In general, as before, Brexit and its consequences are much more critical for the British currency than coronavirus. Navagates forex broker experts believe that the pound will not see strong shocks shortly.
I just decided to buy a new home. Do I have to wait with the deal?
The UK real estate market is affected by several multidirectional factors. The post-election surge is pushing home prices up; the avalanche of coronavirus limits their growth. Maybe it makes sense not to rush into the purchase and wait until prices fall. But the question is, will London brokers want to lower house prices, knowing that the epidemic ends soon? So far, according to a survey of realtors, 83% of them are sure that the COVID-19 outbreak will not affect the real estate market. A lucrative offer, warns Navagates, may turn out to be a scam. So be prudent and invest wisely.