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Going viral

Oh dear, and my Billiton shares were doing so nicely too. The prime Australian purveyor of much-needed steelmaking coal to the People’s Republic of China, and a heck of a lot of iron ore, and a tidy bit of gold as well. Not to mention a six per cent dividend yield, although suddenly it’s heading for seven, and not for the best of reasons. (BLT’s share price had dropped by 12% in 20 days.) Who’d have thought that a flu-type virus could have such international repercussions?

Well, nobody of course, except for anybody who’d thought at least a little bit about the implications of the new coronavirus, Covid-19, which first emerged in Wuhan during the closing days of 2019 – and which had put the whole city into quarantine in the space of just three weeks. Going on to become an official World Health Organisation “global emergency” just ten days later. At which point the new virus had already killed more people in six weeks than SARS (2002-2003) had in two years. Sheesh.

Don’t panic

We’ll be looking shortly at what, if anything, the spreading coronavirus means for the global financial markets – and more specifically, how the recent panicky talk might impact on Britain’s advisers. (Heck, we all make our living by advising clients not to over-react to 30-day crises, and rightly so.) The problem, for some of us, is that unfortunately there was already a growing consensus that valuations were getting stretched in the developed world, and that perhaps it might not take a very significant trigger to spark a sell-off that might end the post-2009 bull run once and for all?

Let me say right away that I’m with the mainstream optimists who think we’ll pull through the journey this year, even if it does mean accepting a roadside tow from Donald Trump’s absurdly over-hyped debt juggernaut. That particular engine of growth will need some expert diagnostics under the hood in due course, and probably an invoice from Big Bill; for the moment, however, it might do us all a good turn this year if it bolsters confidence.

For others, however, with a more Malthusian bent, the coronavirus provides a convenient scourge with which to whip the rest of us growth-addicted liberals into the realisation that eight billion people on the planet is probably more than it can comfortably cope with. And that a virus with a 23% mortality rate (don’t panic yet!) might reset the world’s demand expectations in a way that hasn’t been seen since the plagues of the Middle Ages. (Repeat: don’t panic yet. All such prognostications are statistically faulty. As we’ll see shortly.)

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