Investing in coronavirus times. Don't lose sight of the big picture.

Like an out-of-control train rushing towards us – that's what the crisis triggered by the coronavirus looks like. Nevertheless, investors should take a holistic view. How coronavirus may affect more than just the global economy – and why the worst is probably over on the financial markets.

In the short term: Shrinking global economy, but optimism

With a self-imposed quarantine on the economy and society, politicians have triggered an unprecedented global contraction, whose impact they are now resolutely trying to mitigate. As a result, investors are currently seeing a lot of bad news – but there are also reasons to be upbeat.

Global economy suffers from coronavirus

  • Earnings per share collapse. According to FactSet, most analysts expect company earnings per share to drop by about one-third on average for the quarter. The stock markets have already priced in a 50% drop in profits.
  • The world economy is contracting. According to the market consensus, a double-digit contraction in the global economy in the second quarter of 2020 looks likely.
  • Bankruptcies are rising, ratings are falling. It is to be hoped that countries will intervene to prevent systemically important bankruptcies. Just what impact the foreseeable flood of rating downgrades will have remains to be seen.

Financial markets probably have the worst behind them

In the last three weeks, the world's stock markets have lost the equivalent of around CHF 25,000 billion. This equates to a third of global economic power – and suggests that, on the stock exchanges at least, the worst is behind us. The huge rescue packages in Europe and the US also support this assumption. The pandemic has sent the markets into extreme panic. However, experienced investors also know that extreme situations of this kind have often thrown up buying opportunities, as the case of energy bonds shows now.

Extremely high risk premiums for energy bonds

Price difference between investment grade energy bonds and cash in basis points.

Source: Credit Suisse
Last data point: March 20, 2020

The long view: The global economy after coronavirus

Why investors should look back at the future

Futurologist Matthias Horx recommends that we look at the future from an imagined backward perspective. Often, when we "look into the future" we primarily see insurmountable obstacles piling up ahead of us. If, on the other hand, we include ourselves and our inner transformation in our vision of the future, then we arrive at a more balanced picture.

So let’s imagine we're looking back at the "black March" of 2020 from the end of this year. Perhaps we'll then be amazed about some things. For example...

… that the world economy could shrink so much without collapsing.
… that despite the expensive stock market crash in March 2020, we can also identify positive aspects of the crisis.
… how quickly humanity has won the race against time to draw the virus's lethal sting.
… that overcoming the crisis was due much more to our natural intelligence than to artificial intelligence.
… what a broad range of disruptive innovations and changes the crisis has triggered.

Far-reaching changes – not just in the global economy

The coronavirus crisis is leaving deep marks on the economy. But politics, society, technology, and the environment are also undergoing disruptive change. What our life could look like after coronavirus – and the previously unimaginable opportunities that are emerging.


  1. Jet setting, cruises, and business trips are in long-term decline. The crisis has triggered a new modesty in society, a "back-to-basics" attitude.
  2. Solidarity is becoming a more important value. The idea of universal healthcare is also gaining ground politically – even in the US.
  3. There is growing acceptance of more regulation and supervision. The Internet of Things is driving profound social change.


  1. The digital economy is undergoing extraordinarily rapid development in all aspects of daily life. What was just a futurologist's dream before the crisis becomes the new normal when it is over.
  2. About one billion students will regularly receive lessons online. The "Edutainment" Supertrend is changing the form, content, and business models in education.
  3. Digitalization in the healthcare system is experiencing an international growth spurt. Telemedicine, national health databases, and pharmaceutical research are seeing increasing demand from patients, states, and health insurers.
  4. The "datafication of almost everything" is gathering pace. The Internet of Things is driving the acceleration of mass data collection. It is also becoming easier to issue new regulations, especially when there is a public interest, as in the case of a pandemic.
  5. Contactless payment systems are becoming more important than cash. In Europe, the European Mobile Payment Systems Association (EMPSA4), together with the European Central Bank (ECB), is setting new standards.
  6. The expansion of digital infrastructure, in particular the 5G mobile network, is being driven ahead worldwide. It is triggering a new flood of application developments. We will be surprised by how much the recession in 2020 has accelerated growth in this area.
  7. Autonomous mobility will increasingly compete with public transportation in cities – but scarce parking facilities will create political conflicts over distribution.
  8. The rise in digitalization will also boost the need for cybersecurity. The "Security" Supertrend will emerge from the crisis as one of the winners – also on the stock markets


  1. The government rescue measures will eat into tax revenues this year and cause public debt to rise globally. Both will lead to predictable political distribution conflicts in the future.
  2. The economic importance of the state will grow. On the one hand, countries will recapitalize illiquid companies, such as national airlines. In addition, national budgets for public health and related areas are likely to see long-term growth.
  3. Both national debt and taxes will rise worldwide after the crisis.
  4. Globalization will be followed by "glocalization." While global production chains will not disappear, decision-makers will prefer local production in the future. New technologies such as 3D printing will accelerate this process.


  1. Satellite images of a world under quarantine encourage socio-political awareness of the environment.
  2. Economic trends toward more local focus and shorter transportation routes will help the global climate, as will "back-to-the-center" political trends.


  1. The crisis encourages pragmatism, professionalism, perspective, empathy, and honesty. The popularity of those who distinguished themselves prior to the crisis primarily through polarization will sink. The center ground of politics, which had been written off as dead, will become more popular after the crisis.
  2. National borders are becoming more real. Stricter controls on trade and cross-border travel will reinforce the trend toward glocalization.
  3. As a result of the crisis, the euro zone will find that the idea of a community based on solidarity has to some extent become a fact of life to which there is no alternative.

Financial markets are likely to recover in the second half of the year

The current crisis has created extraordinary distortions in the financial markets. While it is true that stock market volatility will remain extraordinarily high for some time to come, experience of stock market crises shows that investors rarely reach the low points at the lowest point and that it is therefore usually worthwhile to enter the markets too early rather than too late. Our main global economic scenario predicts a U-shaped recovery in the second half of the year because the stimulus delivered by expansive monetary and fiscal policies is unprecedented and, in principle, unlimited.

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