WITH global economy looking certain to enter into recession, perhaps as early as the second quarter (Q2) of this year, investors are left wondering where to put their money to generate income as practically all asset classes are going through a risk-off cycle.
Driven by fear, mainly due to the single unknown factor – the impact of Covid-19 on all of us, whether economically, financially, and even our social lives, markets have not only tumbled but they are now into deep bear territory.
The funny thing about asset prices is where cyclical stocks get impacted by events or by economic data, which is expected, but even the widely known defensive names are not spared as fund managers tend to offload not only losing mark-to-market positions but even winning ones as they are up against redemptions and managing liquidity risk at the same time. In worse cases, especially in extreme market movements, the volatility of prices is also driven by margin calls, an illiquid market and fear.
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