Coronavirus: Staying safe financially and personally

The emergence of the novel coronavirus (COVID-19) has led to a sharp increase in financial market volatility, and within the public, concerns about their own health.

At this point in time, the facts as we understand about the coronavirus are:

  • It is highly contagious and can be spread through one’s physical contact of surfaces containing droplets from an infected person’s cough or sneeze, and also by airborne means through close contact with an infectious person. Its method of transmission is roughly analogous to that of the flu.
  • For every 100 people infected with the coronavirus, around 80 to 85 will experience mild or no symptoms while 15 to 20 will get sick with flu-like symptoms. It is estimated that five people will need to be hospitalised and one person might die.
  • All infected groups can spread the disease. It is arguable that the coronavirus is more dangerous than the flu as the flu may kill only one in 1,000 people infected.
  • The risk of dying is much higher for older people than for children or younger people. Indeed, while children can catch and spread the virus, there seem to be almost no serious cases in children. This disease poses the greatest risk to older people and/or those with pre-existing health issues.
  • There is tentative evidence that like the flu, the coronavirus seems likely to be more dangerous in winter rather than summer. This suggests the virus spreads more easily in cooler weather.

At this point there is no vaccine and most experts seem to believe that while it may certainly be possible to create one, the likely timeframe in achieving this would probably be at least a year away.

In the absence of a vaccine, the key response to date is to physically isolate infected people from others so as to limit the transmission of the disease. Stopping or slowing the spread also means that those who do become seriously ill can get the best quality care in hospital. One of the major problems faced by the city of Wuhan (which was the initial site of infection) was that the healthcare system became quickly inundated beyond their capacity. This meant that patients could not receive appropriate treatment, which resulted unfortunately in some patients’ demise. Those patients may have well survived should they have received the appropriate care.

Physically isolating people from others can result in significantly negative economic consequences, as it reduces spending and economic activity generally in a significant way. However, this involves a delicate balancing act between requiring physical isolation so as to limit the spread of the virus on the one hand, and keeping the economy going on the other.

These economic impacts, along with the psychological consequences of the fear that a pandemic creates, can lead to share markets falling.

What to expect

We don’t know just how wide this pandemic will spread, but it is certainly plausible to believe that it will spread further around the globe and within Australia.

The effects of the coronavirus can be put into three categories:

  1. There will be a negative impact on the economy and the magnitude of such impact lies on a range from mild to serious. Extrapolating to more serious scenarios, this could lead to a recession in Australia and abroad.  
    However, it is likely that the economic impacts will not last forever – even under the most serious circumstances, they are likely to be over in a year. So this is, by definition, a temporary rather than a permanent economic shock.
  2. The financial market impacts will depend upon the severity and duration of the economic impacts, but will lead to falls in share markets across the world in the more serious scenarios.  
    Your investment portfolio should possess a degree of protection by virtue of it being well diversified
    (i.e. by not having all your eggs in one basket) with investments spread across many share markets and individual shares.  
    Your portfolio has also been constructed with regard to the level of risk and desired investment returns that is appropriate to your own unique circumstances.  
    Generally we would support the idea of staying with the agreed investment strategy, neither increasing risk levels in strong bull markets, or selling in bear markets.  
    As with the economic consequences, the financial market consequences are unlikely to last forever.
  3. This leaves the personal health risks to be considered. While we are financial advisors and not medical specialists, it seems fairly clear that there are a range of sensible precautions people can take to limit their risk of contracting the coronavirus.  
    The key method of prevention is limiting your physical contact with other people. If you do not come into contact with someone with the virus, you are limiting your chances of contracting it. The other method of prevention is to observe good personal hygiene, particularly by limiting contact with surfaces that have come into contact by many other people (e.g. public transport handrails).  
    These are the two methods of prevention that the authorities encourage when an outbreak occurs.  
    The good news is that these two methods can be employed by anyone. While physical isolation (if necessarily implemented) might cause considerable inconvenience, it is unlikely that such arrangements will last forever.

What to do

Ideally, your investment portfolio should be well diversified as investing involves an element of uncertainty and some volatility.

The more important considerations include personal health concerns, particularly if you belong to the older age group brackets. It may be useful now to start thinking about how you would go about your daily life through a period where physical isolation is recommended. This should not be thought of as preparing for a catastrophe, but rather adopting sensible approaches in your lifestyle to protect yourself. This could include a reduction of physical contact with others, especially if such physical contact is unnecessary. Doing some planning now as to what this would entail might be a sensible thing to do.

We will respond in accordance with the relevant recommendations and directions provided by the appropriate authorities, including if and when to adopt measures relating to limiting physical contact.


In summary, the economic and financial consequences will lie on a range from mild to serious. No one knows for sure what will happen, however our view is that the impact on the financial markets on a whole is likely to be of a temporary nature and should be over within a year.

There are a range of sensible precautions and modifications to your lifestyle that at some point may become necessary to implement, particularly limiting physical contact with others.


The information contained in this material is current as at date of publication unless otherwise specified and is provided by Matrix Planning Solutions Limited ABN 45 087 470 200, AFS Licence No. 238 256 (Matrix). Any advice contained in this material is general advice only and has been prepared without taking account of any person’s objectives, financial situation or needs. Before acting on any such information, a person should consider its appropriateness, having regard to their objectives, financial situation and needs. In preparing this material, Matrix have relied on publicly available information and sources believed to be reliable. Except as otherwise stated, the information has not been independently verified by Matrix. While due care and attention has been exercised in the preparation of the material, Matrix give no representation, warranty (express or implied) as to the accuracy, completeness or reliability of the information. The information in this document is also not intended to be a complete statement or summary of the industry, markets, securities or developments referred to in the material. Any opinions expressed in this material, including as to future matters, may be subject to change. Opinions as to future matters are predictive in nature and may be affected by inaccurate assumptions or by known or unknown risks and uncertainties and may differ materially from results ultimately achieved. Past performance is not an indicator of future performance.