In light of the spike of new cases of coronavirus, investors are still being complacent in regard to an imminent market correction of as much as 10 per cent.

Following a surge in the number of cases of the SARS-like virus in Italy, Iran and South Korea last weekend, and with reports of the first cases in Kuwait, Bahrain and Afghanistan, global equities registered losses on Monday.

Nevertheless, despite the global financial markets’ reaction to the increase in the number of coronavirus cases, it’s highly likely they will rebound rapidly, as they have done consistently over the past weeks.

Indeed, stocks continue to hit all-time highs.

The main reason for this is due to investor complacency in relation to the extensive impact of coronavirus, which continues to spread, and at a much quicker pace than previously. Naturally, this will affect financial markets, and investors’ complacency will leave many susceptible to some unpleasant shocks.

Major international firms, particularly those with substantial exposure to the Chinese economy, are reducing profit guidance because of the epidemic. Of course, this will have a ripple effect over global supply chains and throughout the world’s economies.

Furthermore, the coronavirus has hit during a time when major economies, like Japan, Germany, India and Hong Kong are facing a downturn because of other issues including the trade war between the United States and China and political protestors which could impact the global economy.

As such, a near-term correction of as much as 10 per cent is likely until governments decide to pump liquidity into the markets and the number of cases of coronavirus reaches a peak.

Indeed, although we’re hoping for a V-shaped recovery, the opinion currently is that it will be U-shaped.

Subsequently, taking into account the prolonged uncertainty regarding the direction of stocks and other risk assets, as well as against the current backdrop, multi-asset portfolios may be favoured by global investors due to their diversification of risk and return.

However, markets around the world are at high valuations and the impact of the spread of coronavirus on profits seems to be vastly misjudged.

Overall, stocks have barely been deterred by the outbreak of the virus. As such, this complacency is somewhat troubling.

Investors must make sure their portfolios are coronavirus-proofed as the number of cases rise and the likelihood of a market correction increases.

Nigel Green is founder and CEO of deVere Group. One of the world’s largest independent financial advisory organizations, de Vere does business in 100 countries and has more than $12 billion under advisement.