7IM finds opportunities in panic reaction

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With the FTSE at 5,000, a panicky overreaction is a long-term opportunity according to 7IM. Terence Moll, Head of Investment Strategy at the firm says: “Shutting borders and keeping people inside their homes hurts economic growth. People will buy less, sell less, and make less. And it feels extremely uncomfortable in the Western world to be told that we cannot do certain things.

“But this is likely to be a temporary shock – not as short-lived as investors believed a month ago, but certainly not a permanent state of affairs. We are optimistic that the spread of COVID-19 will be contained this year. Authorities around the world are moving in the right direction, if not all at the same speed. Expert advice is being listened to and populations are working together. Stopping the loss of human life is the priority, as it should be.

“Thus far, the actions taken to preserve our physical health have been negative for financial assets like equities and commodities. Many equity markets are down nearly 30 per cent this year. We believe this is a panicky overreaction and will give long-term investors lots of opportunities over the next few months.

“We are fortunate. Our blend of strategic and tactical positioning has put us in a position to start looking out for some of these opportunities. We will do this in a measured way, since risk management is at the heart of our investment process.”

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Mark Kitchen
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