Virus Stokes Fears of a Recession
“Black Swan” Events.
The general rule of thumb, where investment risk is concerned, is that while it can be mitigated through, due diligence, hedging, rebalancing and continuous monitoring, it can never be fully muted – these are risks within the market which are expected and understood. However, when aspects such as, randomness, uncertainty and unpredictability, are suddenly introduced in the form of “Black Swan” events, the gap between what we know and what we think we know widens exponentially, resulting in adverse and far-reaching impacts on socio-economic developments.
Current Economic Climate.
The unforeseen outbreak of COVID-19 in the world’s 2nd largest economy and aggressive spread of the coronavirus, which has now affected more than 471,000 people in more than 110 countries, has also resulted in nation-wide lockdowns, scrapping of large conferences, cancelled flights and a myriad of other restrictions in an attempt to contain the spread of the pandemic. These protective measures, while ideal, have decimated demand across most industrial tracts, resulting in economic contractions on a global scale. Furthermore, the unprecedented travel ban between the United States and Europe amidst a price-war between Saudi Arabia and Russia have seen oil prices plummet to USD $30.00 per barrel, intensifying fears of a recession. There have been emergency rate cuts by central banks to mitigate the sharp fall in trading conditions resulting from the virus and to increase lending power to support firms. However, despite these measures, global indexes have entered bear market territory after the abrupt ending of the longest bull market, and top economists have collectively expected a global recession to occur within the next 2 quarters.
The Effects of a Recession.
Recessions or period of economic downturns are not one-time events and usually have a lasting negative impact on individuals, families and business across the board. The Great Recession of 2007-2009 saw Gross Domestic Product and family net worth and income plummet while unemployment soared with recovery only occurring toward the later part of the following decade.
During a recession, unemployment and its resulting steep income reduction can reduce a family’s ability to provide an adequate and supportive learning and growth environment for the posterity, causing many to delay or even forgo tertiary education in favour of “wading out” the slump. The reduce in overall consumer demand and credit crunch would also consume small-medium enterprises, sole proprietorship and research and development initiatives resulting in increased bankruptcies and reduced adoption of new innovations. Ultimately, there is overwhelming evidence stipulating that the economic hardships that arise from a recession often result in further economic scarring and hurdles for the next generation.
Given the economic scarring on individuals and families during unfavorable recessionary conditions, it would be vital for people to secure their assets to minimise the fallout for the future generation. As markets slump and central banks enact emergency protectionist policies to alleviate the impacts of the economic disruption caused by COVID-19, top economists are all but certain of the next recession occurring within the upcoming months.
The vast majority of Malaysians with basic financial literacy hold their assets in more conventional instruments such as fixed deposits, real estate, company equities and, albeit less commonly, gold. However, in Malaysia, the recent political upheaval, compiled with an already weakened global market sent Bursa Malaysia plummeting and saw Bank Negara slashing Overnight Policy Rates – much like other stock indexes and central banks. Furthermore, with the property market sentiment weakening, common investment strategies are looking less likely to be positively yielding.
Protecting You and Your Family – UBB Amanah Berhad’s Crisis Trust
As the recession hits, those who are fortunate enough to be employed will likely have to make do with lower wages, reduced spending, business and investment opportunities. This will be exacerbated by lowered real estate values, poorly performing stocks and increased repossessions/forced sales as the rate of default increases. More often than not, this is a frightening prospect given the time and effort spent attempting to accumulate wealth and savings.
“When written in Chinese, the word Crisis (危 机, Wéi jī) is composed of two characters – One represents danger (危, Wéi) and the other represents opportunity (机, jī)”
John F. Kennedy
UBB Amanah Berhad (UBB) is here to be a chaperone through the heart of darkness that is the current economic climate. UBB is offering individuals, through its newly introduced Crisis Trust, a creditor-proof way to shield their assets from unprecedented taxation and erosion of value in the event of a financial catastrophe to ensure that those closest are not left vulnerable during this tumultuous period.
UBB provides individuals with protection and privacy from legal action and prying eyes through its contest and probate resistant Crisis Trust. UBB’s Crisis Trust allows individuals the opportunity to isolate themselves and their loved ones from the fallout of the expected economic calamity. Click here for more.
1) Mueller, J., & Stewart, M. (2016). The curse of the Black Swan. Journal Of Risk Research, 19(10), 1319-1330. doi: 10.1080/13669877.2016.1216007
2) Lee, Y. (2020). 6 charts show the coronavirus impact on the global economy and markets so far. Retrieved 13 March 2020, from
3) Matt Egan, C. (2020). Oil prices keep tumbling, with no sign of stopping. Retrieved 13 March 2020, from
4) Curran, E., & Jamrisko, M. (2020). World economy powering down daily makes recession more likely. Retrieved 13 March 2020, from
5) Kalleberg, A. L., & VON Wachter, T. M. (2017). The U.S. Labor Market During and After the Great Recession: Continuities and Transformations. The Russell Sage Foundation journal of the social sciences : RSF, 3(3), 1–19.
6) Irons, J. (2009). Economic scarring: The long-term impacts of the recession. Retrieved 13 March 2020, from
7) Aisyah, F. (2020). Sentiments in property market remain weak despite lower OPR. Retrieved 13 March 2020, from
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