Coronavirus and the Markets

Key Takeaways

  • The Wuhan coronavirus has unnerved global equity markets so far in 2020. While still early, compared to the SARS outbreak in late 2002/early 2003, investors are concerned about the possible impact to economies and on markets.
  • However, to date, Chinese stocks are responding in a manner remarkably similar how they reacted to the SARS outbreak in late 2002/early 2003. That is, after an initial shot straight down, equities stabilize and start to rebound as they digest the economic implications of the virus and government responses.
  • If markets continue to follow the SARS template and the policy response from Chinese and other central authorities calms investor nerves, already relatively cheap international stocks could receive an additional boost.

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