Fears over the spreading coronavirus have set into markets. Global stocks, as well as U.S. futures, are tumbling on Monday as the death toll from the virus, which causes respiratory illness, rises and the number of confirmed cases keeps growing. The World Health Organization’s decision not to declare the virus a public health emergency calmed investors momentarily last week, but concerns have quickly returned.
In our call of the day, Jefferies’ global head of microstrategy Desh Peramunetilleke said the virus could be the trigger for markets to “take a breather,” with momentum stocks most at risk and cash and bond proxies the most resilient.
He said there were already parallels with the Sars epidemic in 2003 as the HSI Index has corrected by 3.7% in the past two days, having fallen 9% at the beginning of the Sars crisis.
Peramunetilleke said: “During the 2003 Sars crisis, the Hong Kong-listed stocks that corrected the most included hotels, airlines, telecoms and developers. On the other hand, the most resilient ones were insurance, utilities and railroad. Along similar lines, sectors that have been most impacted over the past two days include food retailing, airlines, e-commerce, Macau gaming, restaurants and education — most resilient sectors include pharma, telecoms, healthcare and utilities.
“On a positive note, it took the markets only about two months to recover the losses incurred over the SARS affected period.”
Jefferies’ chief global equity strategist Sean Darby said investors will also be looking to the timeline of the Sars epidemic in 2003 for clues as to how coronavirus may affect stocks.
He said: “The maximum panic appeared around the WHO Global Health alert while markets bottomed as the WHO began to lift travel bans.”
This article was originally published on MarketWatch.
