If so, you’re not alone. The past couple of weeks have been quite the roller-coaster ride for stock markets around the world. This has come as an unwelcome shock to many investors given the general stability of financial markets for months before this new epidemic.
A handful of industries in particular have been especially hit hard by coronavirus.
- The travel ban in China has driven down oil prices—hundreds of cancelled flights (both into and out of the country) means less demand for oil in the form of jet fuel.
- Manufacturing in China has dipped as many foreign companies have pulled their staff from factories in regions of the country affected by the virus.
- Mining stocks have also slid, as China is a big consumer of natural resources.
- Luxury travel and leisure have been squeezed. Chinese consumers are valuable customers of high-end retail stores and casinos.
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So, are there any upsides? Glad you asked!
- Chinese officials seem to be reacting more quickly to coronavirus than they did during the Sudden Acute Respiratory Syndrome (SARS) outbreak in the early 2000s.
- Chinese New Year was about to kick off when the coronavirus outbreak commenced. This means that the country’s economic would have slowed down anyway.
- Ned Davis Research reports that buying (and not selling) stocks when the World Health Organization declares a global emergency may even be beneficial.
- History shows that the impact of public health crises, like any other disaster, is temporary. Some experts even suggest concerns about the epidemic are overdone. CNBC points out that other viruses (including influenza) killed 34,000 people in the U.S. in 2018, yet it had no impact on the stock market.
As always, keeping with your long-term investment strategy and not reacting to short-term events in the market is (in most cases) the best plan.
Not sure if your portfolio is built to handle these short-term swings? One of our financial advisors can give you a no-cost, no-obligation second opinion. Click here to schedule an appointment with one of them.