The effect of Coronavirus in Financial Markets, Can COVID influence the world market?: The latest figures from global health agencies indicate that Coronavirus has infected more than 43,000 people around the world. 42,638 are confirmed cases on the mainland of China with over 1,000 deaths in the country.
Thus far, global share prices have been largely resistant to coronavirus spread. However, China’s most vulnerable assets have suffered. Currencies of supply chain-integrated economies have declined.
Commodity prices, typically the biggest buyer of which is China, have fallen. While factories and the residence of individuals remain shut, share prices for manufacturing and consumer companies operating in China have decreased.
Could it spread too rapidly to be referred to as a pandemic? Globally, stock investors want to understand this. Up to now, WHO’s not saying it is. In a large region, Pandemic is the spread of disease while a disease occurs widely in the outbreak in a given region.
The effect of Coronavirus in Financial Markets
When the new virus came out, investors weren’t sure how financial markets would be affected. But it’s becoming clearer now. The S&P Global Ratings have reduced China’s forecast of growth in 2020 to 5% by 5.7%.
The Chinese Nomura team scored a 3.8% increase in China’s GDP over March from 6% in December. Nine of Asia’s top ten countries have been listed in the brokerage as susceptible to the virus, including India.
South Korea, Thailand, Malaysia, and the Philippines, Hong Kong, Singapore, Taïwan or Japan. In order to contain this coronavirus, China has allocated more than ten billion dollars. Many provinces in China have been shut down for weeks now, and there is no question of reopening them soon.
The virus outbreak has taken into account the need for an emergency plan that discusses the current state of affairs by RBI Governor Shaktikanta das.
“The overhang of Coronavirus will largely drive the mood of stocks in the short term. Investors are advised to wait and let the market settle down before allocating any meaningful savings to direct equities,” said Modi of SAMCO Securities.
How will the virus affect the world?
If the world’s economy remains low, commodity prices would decline, as would India’s 20% crude-oil price drop. Nevertheless, India is not safe against a global slowdown. On their marketing tour, UBS confirmed that the virus contagion appealed to investors ‘ interests.
“Potential similarities between the Wuhan virus Coronavirus and SARS in 2003 have led many investors to question the extent of the impact on India.
At this early stage, we only see a negligible economic impact, but India is not immune. India’s tourism contributed only 1 per cent of GDP in FY19. But, China is India’s third-largest goods export partner ($17 billion; 5 per cent share in India’s exports). Any likely slowdown in growth in affected Chinese cities could result in a further drag on raw” it said.
The judgment has been mixed. Investors abandoned Asian stocks, while European markets stabilized after the sell-off of the previous day. The stocks grew at the beginning of trading in the United States, with the S&P 500 slightly increasing.
COVID-19 Vaccine update?
As the pneumonial disease spreads and kills 132 people, investors could be in a difficult time and sicken almost six thousand today. Health officers in the US warn of non-essential journeys to China by tourists, while global companies are limiting travel.
Lunar New Year Holiday extended by the Chinese government to disrupt development, which could harm the growth of the economy. For the Lunar New Year holidays several Asian stock markets were closed, but those that were open, including Japanese and South Korean ones, were dropped and potential trading in China plummeted.
The money was spent on safe-haven assets such as gold and increased the value of the US dollar. Some shares in Europe were somewhat weaker.