Fine wine’s stability contrasts with extreme volatility in financial markets

Ahead of Liv-ex’s monthly trade report updating on fine wine market trends, expected imminently, we take a look at the back-drop of the state of global financial markets in March 2020.

Covid-19 smashed into the UK and Europe last month and the challenges faced in Wuhan, China and the Far East suddenly became real with Italy being the front-runner. The impact on humanity across Europe has been like nothing we have ever experienced before and we all have the utmost appreciation for everyone who works in the NHS, social care and essential roles to keep us all as safe as possible at this time.

Global financial markets felt the full force of the Coronavirus in March 2020, as the economic reality of a global health pandemic started to become apparent. The FTSE 100’s 25% fall, posted at the end of March, is its largest quarterly decline for more than three decades and is noted in financial press as the largest contraction in value of London-listed shares since the aftermath of Black Monday in October 1987.

2020 started with the FTSE at record highs around 7,542 since then it has dropped nearly 2,000 points, closing at 5,672 at the end of March which has been the worst month on record for shares across Europe. The Italian stock market plunged by 27%, culminating in its worst quarter ever and the pan-European Stoxx 600 is down 23%. In the US, Wall Street has recorded its fastest ‘Bear Market’ fall in history with the Dow Jones falling 20% in just over 20 days – a faster decline than the 1929 Wall Street crash.

The shares that have been hardest hit so far have been in European travel and leisure companies and oil has also taken a hit with a barrel price trading at $22 at the end of March – a key indicator of global economic crisis.

The unprecedented measures taken by Governments and central banks globally in March have been done with the aim of minimising the fall-out and helping huge swathes of the global population and economies to cope, but these are desperately worrying times.

We will have more detailed data soon but headline statistics for March 2020 is that Liv-ex has reported a significant increase in the number of wines being traded on the exchange and that fine wine values have remained relatively stable with the key Liv-ex 100 index seeing just -1.06% loss in March and the broader Liv-ex 1000 -1.35% both in stark contrast to global financial market losses.

For more information on how to protect capital by investing in a balanced fine wine portfolio see our Guide to Fine Wine Investment and speak to a member of our team on 0203 384 2262.