On March 11, 2020, the World Health Organization declared that the spread of SARS-CoV-2, the coronavirus that causes COVID-19, is officially a pandemic. This declaration follows clear evidence of community spread in several nations on multiple continents, initially beginning in China. In the months since Chinese scientists identified the virus, the scientific community around the world has scrambled to gain a greater understanding of how the virus spreads and operates.
Simultaneously, this crisis has affected financial markets around the world. In the United States, the markets remained mostly stable during the virus’s spread in China. As China took drastic measures to restrict its spread, the disease migrated to numerous countries using international travelers as hosts. At this point, nearly every nation in the world is combating the virus, though several nations are dealing with a more aggressive outbreak.
We have been closely monitoring the situation as it pertains to our clients. During any time of turmoil, markets may become erratic. Members Trust Company has always taken a more conservative approach toward investing so that we can swiftly respond to any changes in the market and protect our clients. Our focus on ETFs has further enhanced our ability to mitigate the damage that the bear markets may cause on unprepared portfolios.
The Impact on Global Supply Chains
When China first restricted its production at the beginning of the year, analysts took note of production supply lines. Many consumer goods are manufactured in China, so the reduced productivity means that tech producers must find alternative suppliers. Even companies that make products in other countries still often use components manufactured or assembled in China.
As the coronavirus spreads through other countries, particularly South Korea, Italy and Iran, we have seen different responses to the crisis. In each case, the national government has aimed to continue production where possible. Here at home, meetings between the White House and various tech companies, including Cisco, IBM, and Microsoft give a good indicator that the Federal Government will use its power to drive as much stability in the market as possible. As we learn more about how the virus spreads, we have a greater opportunity to address safety concerns and maintain vital economic activity such as truck-based transportation and administrative work that can be conducted off-site. Additionally, some manufacturing centers such as Taiwan have been largely unaffected by the coronavirus due to their proactive stance against its spread.
Members Trust Company’s Response So Far
As this situation has developed, Members Trust Company has taken a calm approach. Despite the current market movements, we observe that oil is not at an all-time low. Similarly, industries most likely to be impacted by an acute recession are expected to recover from the temporary decline.
While governments, scientists, and manufacturers have work ahead of them to create a vaccine and therapeutic medicines for those affected by the disease, we maintain a long-term view on the market situation regarding our clients’ investments. The affected industries will rebound, meaning that the current market conditions provide an opportunity for safe long-term investments. These investments also provide much-needed capital to the companies that will prove essential in combating the disease.
How We’ll Protect Your Assets in the Coming Weeks and Months
In recent decades, the world faced challenges with the 2003 SARS epidemic and the 2009 Swine Flu pandemic. In both cases, a viral outbreak led to a disease spreading aggressively through many countries. While the coronavirus is genetically more similar to the SARS-causing virus, the H1N1 virus’s impact is also instructive. We recognize that the current instability will eventually pass.
Members Trust Company has its experienced team protecting each client’s assets as the situation develops. Our approach in 2008 proved one of the most resilient in the financial sector against the global recession that year. ETFs again proved their worth when we weathered the 2009 pandemic, and we intend to apply our time-tested methods as the markets deal with this new viral outbreak. No matter what happens next, Members Trust Company always puts our clients first.
Disclosure: This article is for informational and educational purposes only and is not intended to provide specific legal or tax advice. For specific legal or tax advice, please consult with your attorney and/or accountant. Trust and Investment Products are uninsured, not guaranteed by Members Trust Company, any credit union, or any federal agency. Any investment exposes an investor to investment risk, including the possible loss of principal.