A Goldman Sachs Group asset manager who correctly predicted last year’s rally in stocks says the equity market is overly complacent about the possible damage from the coronavirus and could face more declines.

“We don’t think the stock market has priced in the worst outcome of the virus as containment measures may continue to extend, reflecting what we’ve seen in China and Italy,” Shoqat Bunglawala, who heads the global portfolio solutions group for Europe, the Middle East, Africa and Asia Pacific at Goldman Sachs Asset Management, said in an interview. “So we recognise there are still downside risks from here.”

Goldman’s global portfolio solutions group cut its exposure to global equities to neutral from overweight in recent weeks as the virus quickly spread outside China, hitting Europe and the US, threatening global growth and crimping earnings. The investment unit is keeping its overweight position in fixed income and allocating to such alternative strategies as trend-following, taking a long position in rates and a short position in stocks.

The $1-trillion fund manager is the latest among major investors and strategists to turn cautious on risk assets in the face of growing uncertainty. While the combination of coronavirus fears and an oil price war has wiped out as much as $11-trillion from the MSCI All-Country World Index, equities are coming down from record highs and US stock valuations are still above their historical average. This is making some market players worried that more losses are possible.

“Essentially, we’re getting a shock to profits and we entered this period when valuations were already quite high,” said Bunglawala. “If this virus continues to spread and containment measures are prolonged and extend further, that’s clearly going to have more of an impact on global growth and earnings.”

Major companies, including Apple, BASF and Adidas, have warned about the profit hit as a lockdown in Italy and canceled flights across the world hurt sectors such as luxury and travel. Goldman now expects earnings per share growth in the US to be zero to 2% this year and forecasts an EPS contraction of 6% for Europe.

Bunglawala says that economic data are going to be too delayed to reflect the full extent of damage from the epidemic, so it’s very important to track other factors, such as the speed of the spread of the virus, containment measures and signs of stress in financial markets.

Anticipation is rising for global monetary and fiscal officials to step up their support for the economy, and the US Federal Reserve and Bank of England have already cut interest rates. However, according to Bunglawala, the already low rates limit the scope of potential monetary responses and government leaders might need to come up with their own fiscal measures.

US President Donald Trump is currently pursuing an economic stimulus plan, which may include a payroll tax holiday. Meanwhile, Italian Prime Minister Giuseppe Conte’s government is ready to spend as much as €25-billion ($28.3-billion) on stimulus measures and the U.K. on Wednesday announced total fiscal stimulus of 30-billion ($39-billion).

The S&P 500 Index fell as much as 4.2% on Wednesday as the timing and details of Trump’s stimulus package remained unclear.

While Goldman Sachs Asset Management’s global portfolio solutions group is currently cautious on equities, it is monitoring the virus outbreak and the market for entry points.

“If we see a stabilization in the spread of the virus, we could move from defensive positioning and take advantage of tactical opportunities,” Bunglawala said.