Coronavirus: Volatility and Opportunity

Templeton Global Equity Group


Global equity markets posted their biggest weekly loss since October 2008 in the final week of February and have remained volatile in the first few trading days of March (MSCI All Country World1). The catalyst for the volatility spike was the realization that the coronavirus (COVID-19) had spread well beyond China, posing a worldwide health threat with global economic ramifications. The rush into the perceived safety of bonds during the week was unprecedented; yields on 30-year US Treasuries plumbed new all-time lows, and the spread between two-year Treasuries and the US Federal Reserve’s (Fed’s) federal funds target rate widened to post-financial crisis highs. A basket of emerging market currencies fell to an all-time low against the US dollar, and even gold sold off sharply as many investors demanded liquidity. Global financial conditions went from loose to the tightest since the 2015 Chinese yuan devaluation virtually overnight.


  1. Morgan Stanley Capital International (MSCI) All Country World Index. As of February 28, 2020. Indexes are unmanaged, and one cannot invest directly in an index. Past performance is not an indicator or guarantee of future performance. Important data provider notices and terms available at

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What Are the Risks?

All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments; investments in emerging markets involve heightened risks related to the same factors. To the extent a strategy focuses on particular countries, regions, industries, sectors or types of investment from time to time, it may be subject to greater risks of adverse developments in such areas of focus than a strategy that invests in a wider variety of countries, regions, industries, sectors or investments.