coronavirus: Ray Dalio says market impact of coronavirus is ‘exaggerated’

Ray Dalio says the impact of the coronavirus outbreak on markets has been exaggerated and is likely to be short lived.

Investor concerns over the pandemic “probably had a bit of an exaggerated effect on the pricing of assets because of the temporary nature of that, so I would expect more of a rebound,” Dalio, the billionaire founder of Bridgewater Associates, said at a conference in Abu Dhabi on Tuesday. “It most likely will be something that in another year or two will be well beyond what everyone will be talking about.”

As manager of the world’s biggest hedge fund, Dalio should know what he’s talking about. Bridgewater has made $58.5 billion for its clients since its beginning in 1975, the most by any hedge fund, according to estimates by LCH Investments, although last year its main fund suffered its first loss since 2000.

Global equities have been in turmoil amid fears about the spread of the deadly coronavirus. The death toll from the outbreak has climbed above 1,000 as the Chinese province at the epicenter of the outbreak reported its highest number of fatalities. Still, US and European stock futures climbed with Asian equities as investors looked past the likely economic impact of the coronavirus to push a gauge of global stocks close to reclaiming a record high.

Dalio said investors should instead focus on issues such as wealth and political gaps, the emergence of China — and what that means for the competitive landscape — technology and the environment.

“Each one will interact,” he said. “What concerns me most if you did have a downturn — we are now 11 years in expansion — whether that’s one, two, three years forward, with the larger polarity that exists, the wealth gap and the political gap I would be more concerned about that.”