Market plunge is a correction, not a crash: portfolio manager

By Mike Hall, Martin MacMahon

VANCOUVER (NEWS 1130) – With stocks heading sharply lower due to fears about COVID-19, many investors are hitting the panic button.

But a local portfolio manager says they needn’t worry.

It’s a correction, not a crash, said Andrew Simpson, with Vancity’s investment management team.

He acknowledged there’s reason for concern, as Canada’s main stock index plunged at the open as trading resumed Friday on the Toronto Stock Exchange after it was halted early Thursday afternoon due to a technical issue.

TMX Group, which operates the exchange, said was a system capacity issue within the messaging technology component of its trading engine.

The trouble on the exchange came amid heaving trading as investors have been selling off stocks amid fears that the novel coronavirus outbreak that began in China will hurt the global economy.

But Simpson’s assessment is that this is an opportunity to buy certain assets.

He pointed out that after previous outbreaks, such as SARS, there have been rebounds.

“We have a number of investments in our portfolios that we find are attractively priced that we can add to and we also are able to identify companies that have maybe been overly penalized with this broad-based market pullback.”

The TSX has dropped almost 10 per cent from the recent record highs.

“We had a good run up in the markets to start the year, then maybe we have a six-week pause, where [there is] correction in the markets. But what normally you think might play out over six weeks is taking place over a number of days,” said Colin Cieszynski, chief market strategist for SIA Wealth Management.

“So it’s been a really sharp, severe hit.”

The S&P/TSX composite index was down 529.83 points at 16,187.61 on Friday.

In the U.S., markets are heading for their worst week since the financial crisis with the final tally of economic damage from a spreading virus still unknown.

That doesn’t mean there isn’t potential promise in a select group of companies, either because their stocks have been beaten up so badly in recent days, or because their products may needed to combat the novel coronavirus.

On Friday, companies continued to issue warnings about weaker sales as the outbreak shuts down industrial centres, empties shops and restricts global travel.

In New York, the Dow Jones industrial average was down 438.20 points at 25,328.44. The S&P 500 index was down 55.12 points at 2,923.64, while the Nasdaq composite was down 152.79 points at 8,413.69.

The Canadian dollar traded for 74.32 cents U.S. compared with an average of 74.84 cents U.S. on Thursday.

-with files from The Canadian Press and The Associated Press.

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