What Corona Virus can do to Stock Market ?
A lot it has done in the last one week.
Global markets fell together. 7% fall in a week is so huge. Previously such fall happened during 2008/09, when the index fell by close to 13% in October last week of 2008. Another indicator which says the problem is Volatility index. It moved by 29%, previously in 2009 it touched 31%.
What has happened with Corona Virus till now ?
The impact of Corona virus is world know by now. The Doctor who has told the world is no more. From January second week till now it has killed more than 1000 people and affecting many. China went for new year holidays and the impact of this virus also started increasing during this time.
Manufacturing facilities and activities has been stopped or postponed. Wuhan, the place it originated is completely shut down and people are advised to stay in. All the nearby countries are alerted and everyone has been quarantined before letting them into their country.
Last week there has been reports of death in Korea, Iran, Italy which scared the whole world. More number of people are believed to be infected with this. Mecca has issued notice of stopping people coming from many countries till this virus subsidises. Most of the countries have issued travel alert.
All the above points are with respect to health factors as the result of this virus attack is death.
China has been dominant player when it comes to exports. Nearly 20% of the world exports comes from China. Last time when SARS virus had a similar effect and it was controlled within few months. At that time China’s export share was less than 8% and it has doubled.
Further the consumption has grown strongly in the last 15 years. Supply chain will be affected for most of the bigger companies as most of the companies are already shit for few weeks.
It all started with Apple, which issued a warning regarding forecast for the current quarter. Soon followed up by most of the European companies. Adidas reported drop in sales as China people stayed in and tourism dropped drastically.
Automobile manufacturers in India were dependent on China for manufacturing, continuous shut downs will have an impact slowly. Jaguar Land Rover has shut its plant in China already.
Now the crude oil import by China will fall by a huge margin and this will make the demand for oil to further go down. This will have drop in price of Oil.
Way forward with Corona ;
One easy way is to find vaccine for Corona Virus. Most of the bigger pharma companies are already on their job to discover vaccine.
Once this vaccine is available the death scar will come down and things will return to normal. Till that time the panic button will always be on.
The current impact of manufacturing shut downs will have an impact for the next 2-3 quarters.
What corona virus can do to Stock Market ?
As of now the impact looks huge. The continuity depends on the prolonged economic factors.
Have Cash in hand to deploy whenever there is a huge fall. Last week there was huge fall of 7% and this is the perfect time to invest your money.
Start monitoring the stocks which you want to invest. You will find so many value investing opportunities in these quality companies. Accumulate slowly, steadily for wealth creation.