‘Unjustified’ equities bounce worries Wingate

Wingate founder Farrel Meltzer says he has grave concerns about the V-shaped market reaction in response to the pandemic.

Farrel Meltzer Picture: David Geraghty

Wingate founder Farrel Meltzer says he has grave concerns about the V-shaped market reaction in response to the coronavirus pandemic, but says the associated deflation of asset prices will provide opportunities for astute investors.

“We have had a V-shaped market reaction and that is quite worrying (compared to the economic path). I believe the extreme bounce we have seen in equities is really not justified by what is economically coming,’’ he said.

“We should not be surprised if there are surprises to the downside in the economic psyche. We should be eyes wide open knowing it certainly won’t be all roses in the next few months and years.”

Wingate, which has turnover of more than $200m and assets of $5bn, is backed by wealthy investors, family offices and institutions across its four arms of funds management, consumer ­finance, property lending and private equity.

Mr Meltzer said he had not seen any stress in Wingate’s development portfolio and in the property market generally due to COVID-19, after the group was exposed to the collapse of the Ralan Group last year.

“We aren’t seeing any distress at all. It is a continuation of normal, albeit with some additional stress. We are not seeing prices drop. To our pleasant surprise, almost all of the resales in residential projects have settled through March and April,’’ he said.

“We had liquidity in place for a scenario where that would occur and it hasn’t occurred. But the impact is likely still coming. Those sales that have completed had finance from the banks and were locked in pre-COVID-19. But so far so good.”

He said in the lead-up to the coronavirus crisis there was substantial pressure on pricing across Wingate’s property, consumer and corporate divisions.

“There is (now) much more rational pricing emerging in the market. We ... are keeping our powder dry,” he said.