Global markets had their worst performance since the 2008 global financial crisis this week, according to Reuters news, as fears rise over the spread of Coronavirus, otherwise called COVID-19.
The news agency said that markets around the globe lost approximately US$6 trillion in value as investors responded to panic surrounding COVID-19.
“Hopes that the epidemic, which started in China, would be over in months and that economic activity would quickly return to normal; have been shattered this week as the number of international cases spiralled,” Reuters Reporter Marc Jones wrote.
“The coronavirus now looks like a pandemic. Markets can cope even if there is a big risk as long as we can see the end of the tunnel.”– Chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities, Norihiro Fujito,
So far, COVID-19 has spread to some 60 countries with Mexico and Nigeria confirming the latest cases. In fact, World Health Organization Director General Tedros Adhanom GHebreyesus warned on Friday that the virus could become a pandemic as the outbreak has reached leading developed economies such as Germany and France.
“The volatility isn’t as surprising as the fact that it took so long to rear its head,” Reuters quotes Paras Anand, CIO, Asia Pacific at Fidelity International.
“However, the recent swings indicate the complacency that appears to have settled over markets during the earlier stages of the outbreak has been dislodged.”
To date, COVID-19 has disrupted international travel and supply chains, resulted in the closure of schools, and cancellation of major events. Further, the spread of the virus has dampened the outlook on a global economy which recently emerged from the fallout of the US-China trade war.
According to Reuters, Wall Street shares fell 4.4 per cent on Thursday, recording their largest decline since 2011. Likewise, S&P 500 stocks lost 12 per cent value after a recording a high nine days ago.
In Europe, airlines and travel stocks have also declined by 18 per cent, experiencing their worst loss since September 11, 2001.
Over in Asia, Shanghai and Shenzen shares dipped 3.5 per cent. At the same time, Japan’s Nikkei slumped 3.7 per cent as fears of a cancellation of the Tokyo Olympics looms.
In terms of commodities, oil prices ended at its lowest since 2016 after shedding 12 per cent.
On a more hopeful note, Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities, said, “The coronavirus now looks like a pandemic. Markets can cope even if there is a big risk as long as we can see the end of the tunnel.”
“But at the moment, no one can tell how long this will last and how severe it will get,” he added.