While many investors believe the recent recovery in stock markets could be built on shaky foundations, the bounce back is similar to those seen in the wake of previous pandemics, says ETF provider GraniteShares.
The company’s analysis of the FTSE 100 during the SARS, Swine Flu and MERS crises reveals bounce backs of 21.8 per cent, 25.8 per cent and 16.9 per cent respectively. From its low on 23 March, the FTSE-100 had risen by 24.5 per cent by the close on 28 May.
New research from GraniteShares reveals 33 per cent of UK retail investors believe a stock market bounce back to levels seen in January this year (it reached 7,674 on 17th January) will happen in 2020. Some 16 per cent predict it will take place in Q1 2021, and 19 per cent think it will happen between Q2 and Q4 2021. Worryingly, 6 per cent think we will have to wait until 2022 for a return to the January 2020 level, and 3 per cent think it will take longer than this to happen. Some 19 per cent say they don’t know when it will happen, and 3 per cent don’t expect one at all.
Will Rhind, Founder and CEO at GraniteShares, says: “The coronavirus and associated lockdown have meant that investors have endured a torrid time with billions of pounds being wiped off the FTSE 100. Sentiment has clearly changed in recent weeks as investors look to the easing of the lockdown and news around the development of a vaccine. It is probably safe to assume that it won’t be a smooth path, not only are there difficulties in restarting economies but because of other factors like US-China tensions.
“If market volatility does remain elevated, sophisticated investors have a growing range of strategies and products that they can use to benefit from stock market falls, or enhance returns when they rise. For example, we have 11 single stock FTSE 100 three times short and 11 three times long Exchange Traded Products (ETPs) listed on the London Stock Exchange.”
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