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International Internet Magazine. Baltic States news & analytics Saturday, 11.07.2020, 20:55

Head of Baltic Pensions at Luminor: Impact of crisis on economy, markets unpredictable

BC, Tallinn, 01.06.2020.Print version
Major economic crises do not have a specific pattern that can help easily predict future developments and market movements, which makes it difficult to assess the impact of the coronavirus crisis and the pace of market recovery, Rasmus Pikkani, head of Baltic Pensions at Luminor, said at a pension-related web seminar cited LETA/BNS.

According to Pikkani, it is surprising how positively the financial markets have reacted so far. He added that the behavior of the markets may be premature.

"At the beginning of the crisis, the drops were very rapid and widespread, but there have also been some very large recoveries by now," Pikkani said. "It seems that there is movement ahead of reality with the support of individual positive snippets of news. For example, the number of unemployed is still growing everywhere, and so far, it is not clear how big the second-round effects originating from the labor market will be," he added.

According to Pikkani, unlike the previous crisis, the causes of the current situation are external to the financial sector, and most of the global economy entered the crisis without bubbles.

"Thus, there are also expectations that if the virus can be pushed back, the economic recovery may be faster than in previous cycles. We do not really know what the extent of the virus crisis will be for the entire global economy, as the future of the virus itself is far from clear," Pikkani said.

Commenting on the impact of the crisis on the pension funds, he said that pension collectors should nevertheless not worry too much.

"As with any investment of money, when it comes to pensions, too, one must take into account that crises come and go. But as a whole, the markets are moving upwards for the most part. Even the current crisis will not last forever," Pikkani said, adding that pension fund managers can reduce the impact of the crisis on pension savings.

"In such situations, the share of risky assets, such as equities and higher risk bonds, is reduced in the portfolio. We are also looking into equities and reducing the share of sectors that are more sensitive to economic cycles. We have always been guided by the fact that investments must be diversified and liquid so that we can reposition assets quickly if necessary," Pikkani said.

He added that the markets are being closely monitored an

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