Covid-19 has affected all investment markets making 2020 an unprecedented year with records set for values lost and the economic impact for all nations. Nearly a year ago, in January 2020, we heard the first rumours of a worrying new illness in China, by February cases were cropping up in Europe and in mid-March the Covid-19 pandemic exploded into our lives and hit humanity and global markets like a supercharged tsunami.
Since then we have suffered catastrophic loss of lives and livelihoods – the human cost is terrifying, irreplacable and priceless.
Investments such as stocks, shares and currencies have troughed, reared and plunged their way through the rough seas of 2020, as investment markets experienced record losses with $billions wiped from exchanges, companies’ share values and pensions.
On the 21st December 2020 Sterling and equities experienced another body blow with markets reacting to the announcement on the previous weekend of a locked-down UK Christmas and London, the south east and Wales designated in a new Tier 4 in light of the discovery of a Covid-19 mutation to a more virulent strain of the virus.
Countries in Europe and further afield have responded by closing their borders to UK travellers and there are now worries about supply chains as freight stacks up at international ports and the Eurotunnel. This, along with the failure to hit one of the very few remaining Brexit deadlines on Sunday 20th, propelled stock markets into further falls on the morning of 21st December with all of the key European exchanges down around 2% by midday.
Sterling fell 1% against the Euro on the morning of the 21st where it stood at 1.0899 and 1.9% down on the US$ at 1.3271, in light of the missed Brexit deadline on Sunday 20th. We referred to Covid-19’s impact on currency in our earlier blog and the £ is looking very exposed to a severe downside shock if we end up with no Brexit deal before Christmas.
Commodities such as oil have also been impacted by Covid-19 with major players BP and Shell share prices suffering as a result of the falling price of oil. Other Covid-sensitive stocks such as British Airways owners IAG, Easyjet and Rolls Royce have all been hit. Retailers have taken another beating with the last precious week of Festive shopping now denied.
Brexit and Covid deliver a double-whammy to investment markets
The simultaneous impacts of Brexit uncertainty and Covid-19 have had a cataclysmic effect on investment markets, and the light is looking a long way down the tunnel.
Meanwhile, demand for the traditional safe haven in times of economic distress, gold, typically soared exponentially with the corresponding impact on value. Gold prices have risen 16.3% across the year to 30th November 2020, whilst the FTSE 100 is down -15% over the same period.
Stable fine wine investing has, true to form, weathered the storm delivering stability and growth throughout the Covid-19 era to date, avoiding the volatility of financial markets and commodities. The key fine wine benchmark, the Liv-ex 100 has grown 4.7% across the year to 30th November. Individual wines have delivered double-digit growth and Champagne has been the top performing region with the Liv-ex Champagne 50 up 8.27% YTD to the end of November.
Fine wine has demonstrated its key investment appeal in 2020, to hold steady during periods of economic distress, provide predictability during extreme volatility and the opportunity to diversify and strengthen an investment portfolio.
For more information contact our expert team on 0203 384 2262 and download our Guide to Investing in and Collecting Fine Wine.