Coronavirus effect on Asian markets and world economy
The global spread of coronavirus is snowballing into one of the biggest health scares of the 21st century. It shows no signs of slowing down and its impacts can be felt far beyond the health industry. Manufacturing, tourism, and the stock markets have been hit hard and this has, in turn, slowed economic growth. Companies – both big and small – have started revising their income projections for the quarter and issuing profitability warning calls for the year. World economy experts have, on the other hand, warned of a stalled recovery momentum for the global economy. China, which is at the heart of the COVID-19 outbreak, is most disadvantaged as the outbreak takes a toll on its major industries.
On the same boat with China are most Asian economies that rely heavily on the country’s manufacturing and production industries.
BNP Paribas, the largest bank in France, released their 2020 economic outlook report with special attention to China and the effects CoronaVirus outbreak has on Asian stocks. The paper states that while the “stress (of the outbreak) is just beginning to emerge,” in China, her neighbors and economic allies stand to lose most – some more than others, depending on their dependence on Chinese production industries.
Stocks and securities prices are falling, throwing traders and investors into disarray on how to approach the stock markets. Apple share stock, for instance, dropped by 2.3% after the tech giant sent out a profit warning about its 2nd quarter earnings and this saw it shed more than $40 billion of its market capitalization. How then do traders and investors interested in Chinese and Asian stocks approach the markets?
Economic sectors and stocks unaffected by the coronavirus
According to Apple Inc., the primary reason why they fear about hitting their profitability projection is premised on the fact that most people in China prefer staying indoors. The company is having a hard time getting workers to keep its factories running. One can interpret this to mean that while the manufacturing sector will be hard hit, some industries poof to be better off and that’s where the wise investor will want to shift their attention.
In their report, BNP argues that as more and more individuals choose to remain indoors, the Chinese online retail industry has a field day. So do all other industries with little or no connection or reliance on the manufacturing industry like the telecommunication sector. Some of the Chinese stocks investors might, therefore, want to include into their 2020 portfolio during and after the coronavirus scare include:
- Chinese Tech stocks like Tencent, Baidu, Alibaba, and JD.Com
- Chinese Education stocks like the China Education Group
- Chinese telecom industry stocks like China Mobile and China Unicom
Outside China’s borders, BNP advises investors to consider investing in Asian markets with little ties and even lesser dependence on China’s production industry – and India leads this pack. Here the French banker believes the most promising stocks to be:
- Indian IT like Infosys and HCL Tech
- Indian Telecom like Bharti Airtel
- Indian Consumer Staples like Marico Industries
As the Chinese government, in conjunction with the World Health Organization, come up with either a cure or equally effective measures to tame the spread of the deadly disease, BNP expects a sharp rebound of the Chinese stocks. And when that time comes they want you to know which Chinese and Asian stocks to invest in during the recovery period. Highlighted recovery stocks include:
- Chinese Energy: CNOOC
- Korean Tech like Samsung Electronics and SK Hynix
- Chinese consumers discretionary like Jiangsu Yanghe Brewery, Brilliance China, Media Group, MGM China and Sands China
- Taiwan Tech like TSMC, Hon Hai and Lagan Precision
Todate, Coronavirus (COVID-19) infects over 79,000 individuals in – this includes over 3,000 health workers – with a further 2,600 people succumbing to the deadly virus.
