How Does Coronavirus Affect Financial Investment?

Introduction to CoronaVirus

CoronaVirus Disease [Covid-19] is a respiratory disease with symptoms such as cough, fever and severe breathing. The outbreak was declared a Public Health Emergency of International concern on 30 January 2020 after recording a first case in Wuhan, China. According to The WHO, the pandemic spreads through droplets of saliva when an infected person coughs or sneezes.

CoronaVirus is known to have majorly affected the health sector. However, industries like sports and finance are also beneficiaries of the global pandemic. We discuss some of the brunts borne by the finance and investment sector since the escalation of the deadly disease.

CoronaVirus and Financial Investment

Between December 2019 and now since the pandemic escalated, the global equity market alone has lost $24 trillion in value. The spread of coronavirus has displaced about a third of the global market capitalisation of equity markets. No doubt, the world -including investors- are plunged in a state of utter panic as the financial market has almost never experienced this blow. We have definitely experienced recessions over the past few decades, however, none has been attributed to a virus. 

What Does This Mean for Investment?

Earlier in March 2020, The Bank of America declared that the world is facing a coronavirus-induced recession. According to the speculation, jobs will be lost, wealth will be destroyed and confidence depressed. Temitope Busari also observes that the pandemic will definitely lead to a slowdown in the global economy. When we put this into context, we discover the long-term devastating effect. This is considering the fact that a chunk of the world’s population is located in China.

In Nigeria for instance, the price of oil has taken hit following the ongoing outbreak. There can be probably nothing worse for a country with a struggling economy than having her primary source of revenue negatively impacted.

What Should Be Done?

World-acclaimed investor; Warren Buffett has something for budding and professional investors: “It is scary stuff. I don’t think it should affect what you do with stocks”.  This implies that investors should not create a knee-jerk perception of investments, especially now. There is a tendency for the virus to be contained and investors can go back to their daily hustle and bustle.

The global market may not appear favourable, but declines and emergencies as these should have been accounted for in the investment strategy. From another perspective, what investors are currently up to, is looking to governments for targeted moral support and bailout packages. 

Conclusion

Investors are encouraged to maintain a disciplined investment strategy. Panicking to sell out stocks due to the market slide is not encouraged as this would lead to further losses. It is also noteworthy to mention that investors should be wary of fraudsters looking to take emotional advantage of the situation. While investors keep close tabs on financial investment trends, they should also balance investments with their health. Stay safe and be aware.

Statistics provided by NairaMetrics.