Wuhan Coronavirus: How to react? Buy, sell or hold? And why are stocks going up?
As promised in the mid-week article, here’s our guide to Wuhan Coronavirus for Singapore investors – how to react, what to do, and why the hell are stocks still going up?
Basics: How will Wuhan Coronavirus impact investments?
The impact from the Wuhan Coronavirus will be split into 2 phases:
First order effects – This is the immediate sell-off in financial markets as global investors react to the news. There’s was a lot of uncertainty and fear at the start, which led to a huge sell-off. Gradually, as more news appeared, and investors viewed the virus will less uncertainty, and Beijing seemed to have things under control (and big stimulus started getting unraveled), this sell-off reduced and people started buying the dip. That’s the first part.
Second order effects – The second part comes from knock-on effects to corporate earnings. China is a huge part of the global economy and global supply chain these days. With most of China shut down for...