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Contagion effects: safeguarding assets from coronavirus

Granville Turner, director at company formation specialist Turner Little, advises on mitigating risk and protecting assets against the threat posed by Covid-19, which is currently sweeping the markets

Around the world, concern is growing for Coronavirus, which has infected over 90,000 people, the vast majority of them in China.

It has spread to over 70 countries and killed more than 3,000, surpassing the SARS epidemic of 2002-03. Given China’s importance to the global economy, it is unsurprising the virus is having a knock-on effect and is triggering rising panic on a global scale. 

While the outbreak of coronavirus has the potential to cause severe economic and market dislocation, we are not seeing it directly impacting already established assets.

What we are seeing, however, is the virus limiting travel and businesses that derive income from travel; it is also having an impact on the way business has traditionally been done.

The outbreak of coronavirus has essentially forced the world’s largest work-from-home experiment. Factories, shops, hotels and restaurants are already warning about plunging foot traffic, which is transforming city centres into ghost towns; on the other side, however, we are seeing businesses adapt, with more people trying to organise client meetings and internal discussions via video chat apps, or discussing plans on productivity software platforms.

Investor concerns over the pandemic may be premature, but the outbreak should serve as a forewarning to investors to ensure first and foremost that their portfolio is well diversified across asset classes, regions, sectors and currencies. This is not only the best way to mitigate risks, but also ensures you are well positioned to take advantage of opportunities when they arise.

Unexpected shocks and volatility in assets can provide temptation to trade around news flow and emotion, but effective planning ensures that no matter what happens, you will always remain in control of your assets.

A robust plan employs legal strategies and can include separate legal structures or arrangements such as corporations, partnerships or trusts.

It is important to remember that most asset-protection measures do not work if you’re already in trouble, so the most effective protection must be put in place before you even think you need it.

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