Why this analyst thinks the coronavirus outbreak presents a buying opportunity

In a recent interview with CNBC Africa, Michael Treharne, Portfolio Manager at Vestact, discussed the impact of the ongoing coronavirus outbreak on the global market and shared his insights on how investors can navigate through the uncertainties. Treharne highlighted that while the panic surrounding the virus has led to market downturns, there are still opportunities for savvy investors to capitalize on the situation. He emphasized that despite some companies being directly affected by the outbreak, there are others, like tech giants such as Google, that may not see a significant impact on their business operations. Treharne pointed out that market sentiment plays a crucial role in influencing stock prices, and that it is important for investors to look beyond the immediate fear and focus on long-term investment strategies. Looking back at past virus outbreaks, Treharne drew parallels to the SARS epidemic in 2002, noting that while there was initial panic, the long-term economic impact was limited. He highlighted that the Chinese authorities are taking proactive measures to contain the spread of the virus, which could help mitigate its economic consequences. Treharne expressed confidence that the fears surrounding the coronavirus may be overblown, presenting a potential buying opportunity for investors who are willing to take a calculated risk. When asked about specific investment options, Treharne mentioned that tech companies, which are less likely to be directly affected by the outbreak, could be a safe bet for investors. He also addressed the surge in gold prices, attributing it to the increase in market fear and uncertainty. However, Treharne cautioned against investing in gold miners, citing the unpredictability of gold prices and the cyclical nature of the industry. Instead, he advised investors to focus on long-term investment strategies and avoid trying to time the market. In terms of Chinese companies like Tencent, Treharne acknowledged the potential impact of the virus on their operations, especially with the Chinese market being closed for the Lunar New Year celebrations. However, he remained optimistic that as the authorities gain control over the situation, the infection rate may begin to slow down, leading to a stabilization of the market in the coming months. Overall, Treharne's message to investors is clear: while the coronavirus outbreak may have caused market volatility in the short term, it should be viewed as a buying opportunity for those willing to weather the storm and stay focused on long-term investment goals.