An interview with Warren Buffett on CNBC revealed that the equities guru expects markets to plunge further, but he say he does not intend to join the selling spree.
On Monday US stocks fell as investors panicked. The Dow closed 1,032 points down — a 3.6 per cent drop — cited by analysts as the worst day in two years. The S&P 500 and Nasdaq Composite closed out on Monday, February 24, three per cent lower.
Tuesday morning saw marginal recovery in the US market with futures also rebounding. But oil prices are down, closing on Monday at US$51.43 per barrel which is 3.7 per cent lower and the benchmark Brent crude slid 3.8 per cent at US$56.30 a barrel.
Globally, nearly 80,000 confirmed cases have been reported but market panic is linked to hundreds of new cases in South Korea and Italy. This has made it appear likely that recovery from the spread of the virus will be a speedy one.
Buffett, who is chairman and CEO of Berkshire Hathaway, says there are opportunities in the current market for investors, noting that savings can result from buying stocks at lower price.
“Most people are savers, they should want the market to go down. They should want to buy at a lower price.”– Warren Buffett, chairman and CEO of Berkshire Hathaway
Buffet said investors should be more focused on the long-term, not the short-term.
He was quoted as saying, “If you’re buying a business, and that’s what stocks are… you’re gonna own it for 10 or 20 years,” he said. “The real question is: ‘Has the 10-year or 20-year outlook for American businesses changed in the last 24 hours or 48 hours?’”
On Tuesday in Asia, Japan’s benchmark Nikkei 225 (N225) index slid three per cent in morning trade. Australia’s S&P/ASX 200 fell 1.5 per cent Tuesday. China’s Shanghai Composite (SHCOMP) dropped 2.5 per cent.
CNN reported that South Korea’s Kospi (KOSPI) was up 0.6 per cent after closing down nearly 3.9 per cent on Monday, “it’s worst day since October 2018.”
Meanwhile, Hong Kong’s Hang Seng Index (HSI) also slightly increased following a 1.8 per cent decline on Monday.
The virus meanwhile has given a left hook to company profit, with many major companies adjusting profit forecasts as a result.
Goldman Sachs on Monday issued guidance which said while the global economy and the US economy is expected to continue to grow, supporting equities, it remains concerned about exposure to the Chinese economy.
Expressing concern about Apple, Facebook, Amazon, Microsoft and Google, it was noted that weakness could push earnings lower