The China Coronavirus issue took a turn for the worse when Beijing decided to try and stop the spread of the virus by ordering a halt in public transport both in and out of Wuhan, Hubei. The situation will probably not be getting better for the coming weeks as the risk of the virus spreading is further exacerbated by the start of the Lunar New Year where many Chinese will be travelling, both within and out of the country.
The market has finally taken notice of the seriousness of the flu spreading. Hong Kong casino stocks were hit hard and pharmaceutical firms rose strongly in this week’s trading. Speculation is rife, medical companies are experiencing a surge in trading volume.
In Singapore, we see RWS operator Genting SP (SGX:G13) took a sharp dive while Medtec (SGX:546) a and distributor of healthcare, hospitality and work wear products for the global healthcare and hospitality industry rose appreciate 100%.
Also as of today we had 3 confirmed cases in Singapore. https://www.straitstimes.com/singapore/health/first-case-of-wuhan-virus-in-singapore-second-case-likely. Let’s be careful out there people.
How would it affect the markets?
This is a tricky question as we are talking about a disease that is taking lives and destroying families. I would understand if people think that it is too insensitive of me to discuss about the potential impact of the new coronavirus on stock performance. However, I think it is important as investors to be open minded and understand how the world reacts to events like this.
Schwab Research has come up with an impressive chart which marks previous global epidemics on the graph of MSCI World Index. Based on the chart, the global markets have not been impacted in the near or medium term. How about the Straits Times Index? The table below shows the annual returns of STI for the past 20 years. During the year 2003 where we were hit with SARS, the STI posted a 28.3% return.
History is definitely not on 2019-nCoV’s side, but as they always say, this time it’s different.
Blessings
As we bid farewell to the year of the Pig and welcome the year of the Rat, it is a good time for us to reflect and count our blessings. Look beyond all the disappointment, discouragement, doubt, self-pity and appreciate for the things we have around us. The epidemic is also a good reminder for us to be grateful. Think about how you have needed others, and how you own hands should reciprocate and extend in support.
As I celebrate the coming Chinese New Year, I would imagine life without certain blessings or reflect on how things might have gone wrong, along with a desire to know myself and the world beyond. And for that insight, I am grateful.
Cheers
