SO, HERE WE are. The UK has officially left the European Union (although the machinations have only just begun) and we are in the transition or implementation period. There are three potential outcomes at the end of this transition period. A UK-EU trade deal can come into force, and it will take time to adjust to all the changes to be made. The transition period may also be extended; or lastly, the UK could exit with no deal. What may happen at that time is impossible to know for the time being. However, it is interesting to note that our stock market has lagged behind most others since that unforgettable day in 2016 when 52% (of the 72% of those eligible Brits who did actually bother to vote) voted to leave. The UK MSCI (Morgan Stanley Capital International) Index has returned 17.4% in £ Sterling and 3.8% in US$ terms from 22 June 2016 (the day before the referendum) through to yesterday’s (as I started to write this article on March 12) close of business. The UK’s return since the plebiscite is below the local currency returns of all the other European countries’ MSCI indexes, except for Greece’s (-1.8%). It’s far behind the returns for the European Economic and Monetary Union (EMU) MSCI (18.9%), the World MSCI (41.1%) and the S&P 500 (57.1%). Whether “they need us more than we need them” proves to be the case remains to be seen.

Be that as it may, since first putting finger to keyboard for this piece, the news has been infected with the Wuhan or Corona Virus, COVID-19, or 2019-nCoV as its name has mutated to. World markets have caught the cold that many have been expecting; how ironic that it is actually a real infection that has infected the markets. It seems to me that some market-makers have been looking for a good excuse to blow some froth off the market for pretty much all of this year. There needs to be something to blame for any number of the market corrections that have happened over the years, it seems. Sometimes there appears to be no good reason why markets should be adversely affected by a particular event or events, just that the sentiment of those investment houses which tend to direct the pricing of stocks is that, of the two major factors which govern valuations, fear prevails over greed.

As I have often said in this column, markets do not like uncertainty and the eventual impact of this virus is certainly uncertain! As I type (typically, just before my deadline) the incidence is still substantially less than the 2002/3 SARS outbreak or the H1N1 influenza pandemic of 2009. However, the eventual economic impact will only be known once the number of cases is reducing rapidly rather than increasing, as is currently the case. For those with a sanguine outlook on matters financial, a long-term perspective and a few shillings spare to invest, this will doubtless be a buying opportunity. Markets are firmly down again today, though, mostly due to Mr. Trump’s ban on EU flights. I fear that there will not be much to cheer the markets for some little while.

I have waited a day before submitting this piece to see what the Chancellor of the Exchequer had in store for us and apart from looking a bit more like a Labour Budget than a Conservative one, there seems to be nothing too astonishing. A few little sweeteners here and there, and spend, spend, spend!

On the subject of spending, I’m off to do some NON-panic buying. I’ll be back again, when the weather is a bit warmer.

David Foot