On the last day of the past decade, the World Health Organization (WHO) was notified about the cases of pneumonia of an unknown cause, detected in Wuhan City, Hubei Province of China. Eventually in the first week of January 2020, a new coronavirus (2019-nCoV) was identified as the causative virus by Chinese authorities. Ever since this misfortune has been claiming lives primarily in China, the world awaits its solid cure.
Coronavirus and its Impact
The current outbreak of 2019-nCoV was first reported from Wuhan, China but the calamity has spread to a number of vulnerable countries. This is a group of viruses that causes respiratory infections in humans and impacts birds and mammals alike.
As on 5 February 2020, 25 countries have reported confirmed cases of the coronavirus.
The virus has had a drastic impact on China and other affected countries-
- In China alone, there have been over 400 deaths and thousands of people have been sickened. As on 5 February 2020, 24,363 people had contracted the virus and there were reportedly 191 cases across the globe.
- China has been locking down cities in a bid to stop the spread of the coronavirus.
- Countries like the US and India have been evacuating their respective citizens from China.
- The outbreak has embarked fears of derailment in the stabilisation of the already bleak Chinese economy.
- The plague has resulted in suspended flights, restaurant closures and cancelled tours, impacting businesses of these sectors.
- Significant disruptions in production, investment and exports.
What Are the New Updates on Coronavirus?
On 5 February 2020, the WHO declared that US$675 million was needed to fight further spread of the new coronavirus in China and globally through the months of February to April 2020. The SPRP or Strategic Preparedness and Response Plan puts out activities and resources required by global health entities across the world to execute important public health methods in aid of nations to prepare and respond to the outbreak.
On the business end, companies believe that it is too early to project the concrete impact of the virus, though some have been cautioning about its potential impact, as manufacturing, sales and supply chain operations are on the threat of a slump.
Scientists and medical researchers have been thriving to come up with an effective and efficient cure for the virus. Despite scepticism from public health officials, there have been a few media reports of breakthrough treatment for the coronavirus by a few UK scientists, though no official statement has been made yet.
On the other hand, China has been reportedly eying the coronavirus cure in concoctions of Western antiviral drugs and traditional Chinese medicine. Though the efficacy of these remedies remains a subject to extensive research and development.
As of now, there is no clinical proof of a single medicine that completely cure coronavirus and its symptoms.
Impact of Coronavirus on Stock Exchanges
Corporations have been warning investors about the coronavirus fallout with few believing that it is too early to judge the business impact and others preaching about its potential adverse effects. Few stock market analysts predict that the crisis will possibly stabilise in April 2020.
The coronavirus pandemic has been increasing the negative impacts on broad ranging Chinese companies at the forefront of the enlarging economic crunch. When the market reopened after the Lunar New Year holiday on 3 February 2020, the Shanghai Composite index recorded one of its biggest daily drops in the past few years by almost 8%. The hardest hit was on the manufacturing, materials and consumer goods companies. On the contrary, healthcare shares soared. It should be noted here that retail investors dominate the Chinese stock exchange.
However, a couple of days later, with speculations (and no official report) about a cure to be found soon, the 30-stock index Dow closed higher by approximately 500 basis points on 5 February 2020, as investors shrug off nervousness that the coronavirus will slow down the global economy.
In Australia, the ASX more than offset the substantial plunge at the beginning of the week and advanced by 73.2 basis points to settle the day at 7049.2 on 6 February 2020. However, the Australian tourism sector is probably the main sector to watch for the coronavirus fallout in Australia, as China has become the largest source country for international tourist visits to Australia, accounting for approximately 15% of total international tourist visits.
Stocks to Be Wary of During the Coronavirus Debacle
Let us look at few Australian stocks that have been constantly updating the market with the pandemic situation-
Biotron Limited (ASX:BIT)
On 6 February 2020, R&D and commercialisation of drugs focussed company BIT announced that it is in the process of evaluating several promising compounds for activity against coronavirus. The Company claims to have more than 30 compounds with good activity against a range of coronaviruses.
According to BIT, these compounds bear the potential to reduce the levels of coronavirus by 90 - 100% in infected cell cultures. Adhering to the recent breakout in in China, the Company is now focused on testing a select set of these compounds against the new 2019-nCoV in specialist laboratories.
Jatenergy Limited (ASX:JAT)
An expert in Australia-China trade, JAT lays emphasis on expansion in the health and wellness consumer goods export space of Australia region. It has been developing a range of lactoferrin dairy products since a couple of years.
Driven by the emergence of the coronavirus, the Company has witnessed unprecedented demand in China for its Neurio ranges of dairy products which contain lactoferrin, with sales amounting to $3.44 million in January 2020 alone. As reported on 3 February 2020, Orders so far for February 2020 are $2 million and March 2020 are $1.8 million.
Moreover, the Company expects its Maternity and Infant Boutique to open in Shanghai in March 2020 despite the ongoing disruption in China caused by the coronavirus.
With the source and extent of the pandemic not yet known, much remains to be understood about 2019-nCoV. With the current limited understanding of the disease, economies have been thriving alike to get the world free of this new calamity and taking appropriate response measures.
This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold. We are neither licensed nor qualified to provide investment advice.
There is no investor left unperturbed with the ongoing trade conflicts between US-China and the devastating bushfire in Australia.
Are you wondering if the year 2020 might not have taken the right start? Dividend stocks could be the answer to that question.
As interest rates in Australia are already at record low levels, find out which dividend stocks are viewed as the most attractive investment opportunity in the current scenario in our report.