Luxembourg's fund industry rebounded by adding €253 billion in assets last month after the coronavirus pandemic put an end to a year of growth for Europe's largest investment fund centre, the country's financial regulator said on Wednesday.
Assets in mutual funds domiciled in the Grand Duchy dropped by half a trillion euros in March as the World Health Organization declared the coronavirus outbreak a global pandemic and markets went into free fall.
Investor confidence appeared to be returning after the initial battering though, with a 6% increase in assets in April from the previous month, bringing the total value to €4.4 trillion, a report published by the Financial Sector Supervisory Commission (CSSF) said. Assets under management had totalled €4.8 trillion in January.
"The exceptional support measures implemented by most governments and central banks around the world to stabilise the economy and the financial markets, together with the de-containment measures announced in several countries, resulted in a sharp recovery in stock market prices in April, causing all categories of mutual funds to rise," the CSSF report said.
Governments responded to the pandemic by rushing to launch rescue packages. Luxembourg is spending more than €10 billion in loans and grants as it hopes to mitigate the impact of economic decline. National statistics office STATEC had forecast a 6% decline in GDP for 2020 in a best-case scenario.
In mid-March, the European Central Bank announced a €750 billion Pandemic Emergency Purchase Programme to buy public and private sector securities. The European Commission on Wednesday presented a €750 billion recovery plan for the bloc's economy, dubbed Next Generation EU.
Luxembourg on 20 April launched the first phase of lifting its lockdown restrictions by reopening construction sites. This was followed in May by the gradual reopening of schools, shops and museums. Restaurants, cafés and bars can open to customers this week.
As of Wednesday, Luxembourg counted 4,001 confirmed cases of coronavirus with 100 infections still considered active. The virus has killed 110 people in the country and 49 patients remain in hospital, including four in intensive care.