The Markets, Coronavirus and what we can do

The markets last night took a dive globally. Everywhere from New York to Karachi, we saw sudden selling and almost panic in the past 24 hours. All of this on the back of coronavirus.

Coronavirus?

Coronavirus or nCOVID-19, is a new coronavirus that has been identified. It spreads as easily as the common flu and is about 10x more fatal. That may sound like a lot, however, considered the low mortality rate of flu, cCOVID-19 is only slightly more dangerous than pneumonia and far less dangerous than the recent Ebola or SARS, although it spreads more easily.

Impact?

The main reason why nCOVID-19 has become such a big deal is that in the beginning of the outbreak, no one was really sure how high the mortality rate would be. China was vigilant and the media reports were haunting, to say the least. Wuhan remains the city with the highest mortality rate and it set the stage for how coronavirus would be portrayed throughout the world.

According to worldmeters.info there have been 114,344 confirmed cases, 4025 deaths, and 64000 recoverees till 10th march 2020. Looking at the Log Graphs (which maps change rather than absolute number) we can see that the figures are flattening out, however, there has been an uptick in the last day or two.

The uptick in the last day or two, has been the main reason for the market spooking. This, of course, can reverse in a day with some good news, but how likely is that no one really known.

The Market?

Trading and business activity in many parts of Europe have been suspended. Schools remain closed in parts of Denmark, 16million people in Italy are in Quarantine and the fear of coronavirus alone is causing people to stay indoors.

Karachi Stock Exchange hit its circuit breaker yesterday while NYSE saw a bloodbath. The graph below shows how the last few days of bad news, especially from Europe, have impacted sentiment. An almost 20% fall from recent highs has not been seen in the past years. As we can see the volumes also spiked more than anytime in the past 10 years. The sell off is hard, very hard. Only solace being we have not yet hit the lows of 2018 and the oil market should 'somewhat' support this. Interest rates are already cut and I expect at least Europe to initiate QE, while China is already expected to have little growth this year.

Is the market reaction overblown? I believe it is. But the market is the market and when everyone panics, there is little one can do. The best thing would be to wait and see if it breaks the 11,000 barrier from 2018. Any good news from anywhere in the world, can quickly reverse this.

Many are calling conoravirus a blackswan event, an economic event that no one foresaw, that no one prepared for, and crashes markets and industries altogether. We know the markets are fragile, much of Europe already is. The bankruptcy of Flybe airlines shows how fickle some industries and businesses are when banks pull the lines.

What to do?

One does the same thing as anyone does during such times of uncertainty. Not to panic and focus on what you can change and not what you cant change.

Everyone should be focusing on themselves and what they can manage and this means something different for everyone. It might mean not taking out a loan you were considering, reducing inventory in your business or holding off growth plans. Personally, it may mean reminding yourself of the facts of the virus in order to not panic or not spread online rumors and be a good samaritan. It may also mean going out and doing something for the local businesses so they don't go bust. A savvy investor might be going over the stock market to see any bargains they can find. Governments must also focus on what they can control i.e disseminated actual information and not fake news and not what they can't control, such as blaming China

Conclusion:

The current predicament is not the end of the world. Not even close. Will it turn into a great depression sort of an event, too early to tell, but it surely has the potential. There are things that we can't control and things we can. Its always best to remain positive, not to panic and manage oneself in the circumstances. It may not be easy, but it doesn't have to be worse than it really is either. As always though, we will get through this as well.

Umair Usman is a Rapid Transformational Therapy Practitioner, a businessperson, and a blogger. You can know more about him at www.thecognitiveconsultants.com. To book a free consultancy session, please fill the form https://tinyurl.com/y6n2vv8w