Investors have seen this movie before. A highly contagious virus begins to spread through the global population before it can be contained. People stay home and businesses shut down. Market repricing goes into overdrive as investors assess the economic fallout.
What happened at the start of the COVID-19 crisis was well off everyone’s radar. Few people, if any, could have envisioned a global pandemic that would bring economies to a sudden halt and initiate a risk-off moment in financial markets.
Then there are the secondary effects of the COVID pandemic, including supply-chain bottlenecks, fiscal stimulus on a massive scale, surging inflation and, most recently, policy tightening by central banks. The pandemic’s economic fallout has been felt across the globe, including in China. Institutional investors there understandably have a heightened sense of risk should a second global pandemic prompt new shutdowns around the world.
Investors are evenly split, 45% to 45%, on whether a second pandemic and global shutdown would have a severe or extremely severe impact on their portfolios. And investors do not feel any more or less prepared for this scenario than their global peers, with 70% feeling as though their organizations are ready to handle the fallout from a second pandemic. Globally, investors feel more prepared for only one other tail risk in the survey – a return to zero interest rates prompted by an economic slowdown.
Chinese Investors Feel More Prepared for Second Pandemic
Source: 2022 PGIM Global Tail Risk Monitor Survey
44%
of CHINESE INVESTORS ARE FAR MORE CONCERNED THAT A SECOND PANDEMIC AND GLOBAL SHUTDOWN IS LIKELY TO OCCUR OVER THE NEXT THREE YEARS
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