17th November 2019 - According to The South China Morning post the first case of the 2019 Corona Virus - also called as Covid -19 was first discovered in Wuhan.
20th December 2019 - There were at least 60 confirmed cased of the Virus and a lockdown was imposed. (Source : The Guardian)
31st December 2019 - China informed WHO of the situation calling it a "pneumonia of unknown cause" (Source : The WHO website)
10th of January 2020 - WHO issued its first guidance - calling the virus as "Novel Coronavirus" (Source : The WHO website)
23rd January 2020 - The Chinese Govt. announced lockdown of Wuhan (Source : Wikipedia)
30th January 2020 - First case of Corona Virus is discovered in India as a student from Wuhan travels to Kerala, India and tests positive. (Source : Wikipedia)
11th March 2020 - WHO declares Novel CoronaVirus also called as Covid -19 a "pandemic" (Source : The WHO website)
24th March 2020 - The Govt. of India announces a 21 day nationwide lockdown. (Source : Wikipedia)
A careful observation of these dates raises many questions
a) Why is it that the virus spread so fast to the rest of the world and not within China?
The lockdown in Wuhan was imposed 20 days after China informed The WHO.
( Google search : There are 55 pairs of trains daily between Wuhan and Shanghai and 30 pair of trains daily between Wuhan and Bejing)
b) Why did the WHO take so much time to declare Covid -19 a pandemic?
Luckily India started testing and quarantine of travellers from abroad (starting with those from Wuhan) from as early as January 24th 2020. This resulted in slow spread of infection in India.
Markets
Markets do not like uncertainty and uncertainty is exactly what we got out of this event. How many fatalities, job losses, industry closures, bankruptcies, timelines of lockdown - how long etc. etc.
Longer the uncertainty - bigger the problem.
The Way Ahead
This is for the first time that an economic sudden stop at the level of global economy has been witnessed.
No economic model or corporate valuation model can easily incorporate the range of uncertainties associated with an event of this magnitude.
Various Governments have announced policy measures to ease the difficulties - announcing interest rate cutes, deferring tax payments, loan repayments etc etc.
However the extent of effectiveness of such measures will only be clear over a period of time.
Coming to India - as the lockdown is in progress, one can observe that consumption of essentials food, packaged foods, medicines etc. continues as the supply chain has been generally intact.
Similarly data consumption (internet viewing and video conferencing) is on the rise and this may be a secular trend as more and more capabilities are built to facilitate remote working.
Primary health care and insurance are some other sectors which are functional (online buying of insurance and diagnostic tests) and are likely to do well in future as well.
As long as companies which are providing such services do not have debt - they do make a compelling case to invest into.
Even if that is the case - one has to be very cautious of the situation - as this time it is the virus, and not the economics that decides the time line.
20th December 2019 - There were at least 60 confirmed cased of the Virus and a lockdown was imposed. (Source : The Guardian)
31st December 2019 - China informed WHO of the situation calling it a "pneumonia of unknown cause" (Source : The WHO website)
10th of January 2020 - WHO issued its first guidance - calling the virus as "Novel Coronavirus" (Source : The WHO website)
23rd January 2020 - The Chinese Govt. announced lockdown of Wuhan (Source : Wikipedia)
30th January 2020 - First case of Corona Virus is discovered in India as a student from Wuhan travels to Kerala, India and tests positive. (Source : Wikipedia)
11th March 2020 - WHO declares Novel CoronaVirus also called as Covid -19 a "pandemic" (Source : The WHO website)
24th March 2020 - The Govt. of India announces a 21 day nationwide lockdown. (Source : Wikipedia)
A careful observation of these dates raises many questions
a) Why is it that the virus spread so fast to the rest of the world and not within China?
The lockdown in Wuhan was imposed 20 days after China informed The WHO.
( Google search : There are 55 pairs of trains daily between Wuhan and Shanghai and 30 pair of trains daily between Wuhan and Bejing)
b) Why did the WHO take so much time to declare Covid -19 a pandemic?
Luckily India started testing and quarantine of travellers from abroad (starting with those from Wuhan) from as early as January 24th 2020. This resulted in slow spread of infection in India.
Markets
Markets do not like uncertainty and uncertainty is exactly what we got out of this event. How many fatalities, job losses, industry closures, bankruptcies, timelines of lockdown - how long etc. etc.
Longer the uncertainty - bigger the problem.
The Way Ahead
This is for the first time that an economic sudden stop at the level of global economy has been witnessed.
No economic model or corporate valuation model can easily incorporate the range of uncertainties associated with an event of this magnitude.
Various Governments have announced policy measures to ease the difficulties - announcing interest rate cutes, deferring tax payments, loan repayments etc etc.
However the extent of effectiveness of such measures will only be clear over a period of time.
Coming to India - as the lockdown is in progress, one can observe that consumption of essentials food, packaged foods, medicines etc. continues as the supply chain has been generally intact.
Similarly data consumption (internet viewing and video conferencing) is on the rise and this may be a secular trend as more and more capabilities are built to facilitate remote working.
Primary health care and insurance are some other sectors which are functional (online buying of insurance and diagnostic tests) and are likely to do well in future as well.
As long as companies which are providing such services do not have debt - they do make a compelling case to invest into.
Even if that is the case - one has to be very cautious of the situation - as this time it is the virus, and not the economics that decides the time line.
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