Stock markets are plummeting, unemployment rates are drastically increasing and governments around the world are creating financial stimulus packages to save their local economies hoping that other countries will do the same. There is no doubt that the current crisis will put its mark on the global markets. The question now remains whether this will be a short but intense intermezzo or if we are looking into a longer lasting, potential recession situation. It all depends on how soon societies can be re-opened.
China now seems to have the pandemic in some sort of control whereas in Europe and the US it is just getting worse. I anticipate it could take months before reaching a stable situation and then months before countries are back to normal. The re-opening of economies will probably be a long, slow process. All initiatives will require monitoring to reduce the risk of fallbacks and this will take time.
The big joker is the US economy. The US was slow to react, seems to be lacking an overall strategy, has the most corona patients in the world and consequently might take a harder hit. But it will also be interesting to observe some of the European countries such as Italy and Spain whose health systems are sincerely stressed combined with relatively weak economies. They will certainly be looking to the EU for financial aid as will many other European countries.
But how does this Corona pandemic affect P2P? Well, until now I would say that the impact has been limited. But as a amateur investor, I only see the tip of the iceberg. What I do notice is that platforms have generally increased their communication towards investors and some platforms are offering higher interest rates to combat the lower activity.
Some platforms such as Crowdestor have decided to postpone payments for a period to avoid too many project defaults. This makes perfect sense from an investor point of view, since succeeding projects tend to pay better than defaults.
The current crisis has also led me to reflect a bit about my own P2P portfolio. My gut feeling tells me that I am too exposed. I have therefore stopped autoinvesting on selected platforms, hoping to withdraw 1/3 of my P2P investments within the next 2-3 months or quicker depending on how the situation develops. Hopefully these funds can at some point be invested in stocks or real estate once the outlook is a bit more stable.