What happened to the financial world during and after SARS and can we expect a similar market response from Coronavirus?
Coronavirus is all over the news. Often compared to SARS, this contagious virus is only now having an impact on financial markets, despite it being identified sometime in January or early February.
If you are patient and have the ability to hold on, you may not need to buy into the market ‘frenzy’ rhetoric. Let’s look at what happened to financial markets during SARS to understand more what the potential impact of Coronavirus could be.
The below graph highlights the performance of the entire global share market since 1970 with various epidemics marked. The general trend is that while epidemics affect global stock market, over one and three month periods, over the longer term the market has continued to recover.
Since SARS in 2003, the global economy has become more and more economically integrated, so this time the impacts of Coronavirus may be felt harder for longer, particularly stocks in the tourism, travel and luxury goods sectors.
And what’s the best way to immunise yourself from these shocks? A well-diversified portfolio.
Disclaimer: Please note that these are the views of the writer, Jodi Pettersen, Investor Relations at eInvest and is not financial advice. To find out how to invest in our active ETFs, visit here. The product disclosure statement and more can be found at www.einvest.com.au