March 2, 2020
Spread of this Pandemic – Data on worldometers’ website shows that so far 89,081 cases have been reported as infected from coronavirus with 3,057 confirmed deaths and another 7,375 in serious condition. Coronavirus cases have been reported in 64 countries including India. China, South Korea, Italy, Iran, Japan, Singapore & France reporting more than 100 cases. That’s the gloomy side of this pandemic.
Is Situation Improving – Of the 89,081 reported cases, 48,205 cases have recovered and been discharged. Only two countries China & South Korea have new cases. 9 of 68 affected countries have no active case of coronavirus including our own India. More than one third of these countries have reported just one case and another one third reporting less than 10. WHO has estimated 2% fatality rate for coronavirus patients. Since 19 February number of active cases are on decline.
Impact of Coronavirus on World Economy – China, the epicenter of this pandemic contributes to about 16% of the world GDP. It is basically a trade surplus country. That means China is major supplier of goods and raw material to other countries. B2b segment occupies a significant share of its exports. Coronavirus have caused closure of its manufacturing facilities across major industrial hubs. This has disrupted supply from its facilities. How long these facilities will remain shut, there is no guess to that, at the moment. The fair guess on amount of loss and time to recover that loss and to restore the supply will only be known once it is fully controlled in China. Some initial guess work have estimated world GDP growth rate to contract by about .4% this fiscal.
Impact on Indian Economy – For long Indian government had been working very hard to attract world manufacturing through its “Make in India” campaign. Now with coronavirus exposing world to concentration risk of manufacturing facilities at one place, India stands to gain through relocation of many such manufacturing facilities into India. In short term also Indian businesses should benefit by filling the supply gaps created because of supply disruption from China. All this should help Indian Economy to achieve its dream $ 5 trillion economy tag much faster.
What should Investor do – In February prominent global markets especially USA’s had fallen by over 15% from their peaks. Indian markets also fell by about 10% from their highs due to coronavirus effect. We believe these are good levels to enter into equity markets. Today most Asian and Indian markets have started recovering their positions. This is because of no further aggravation of coronavirus is reported and investors have also started to take advantage of low valuations.
Will markets recover from here or will go down further – to be honest we strongly believe no one can predict this. What we know and advise you that present are good levels and its good time to rebalance your portfolio. You should put in some money at these levels. DONOT forget “Always keep some money in liquid funds.”
Contact your InvestmentMitra today to discuss your portfolio and to check if you need to take any action now.
You may also write to ajay@investmentmitra.com or whatsapp on 9958447700 for your query.
Happy Investing!
Team InvestmentMitra