The Fight For Toilet Paper - Panic Buying Vs Selling Amid Coronavirus

  • Mar 12, 2020 AEDT
  • Team Kalkine
The Fight For Toilet Paper - Panic Buying Vs Selling Amid Coronavirus

As surgical masks are one of the key helpful objects in safeguarding people from deadly virus spread, these masks are being sold at high prices globally amidst panic buying, creating excessive shortage of supplies.

On the latest note, fresh shortage in the supplies of toilet paper has made its way to Australia.

Cry for Toilet Paper

Do you have enough toilet paper at your home or office?

You might want to save some of them in reserves as the supermarkets are deserted with no toilet paper, and consumers are finding it difficult to find them in empty supermarket shelves.

With many events of panic buying already reported in the currently prevailing coronavirus outbreak, the latest episode was reported at a Woolworths (ASX:WOW) store in Chullora, NSW Australia, where a melee took place between shoppers who wanted to buy the toilet paper amidst the supply crisis.

Events comprising of social as well as economic unrest or a combination of both may lead to anxiety among the people which could intensify and result in panic buying. The recent scenario of coronavirus outbreak has resulted in empty supermarket shelves due to the panic buying in China initially. As the disease finds new hosts in other countries, similar trends can be seen across the world.

Coronavirus has been declared as a global pandemic by WHO, with deadly disease now spreading to 114 countries.

Most common things amongst the products that vanished quickly from the supermarket shelves are the consumer necessities like food and hygiene products and bathroom supplies.

Good Read: The Mysterious Coronavirus and Preventive Measures to Stay Safe

Seeing the implication and amplification of the novel coronavirus in China as well as globally, the coronavirus disease has been declared as a global pandemic by WHO, with deadly disease now spreading to 114 countries.

One of the major challenges that the administrations across the globe are facing is the challenge of meeting the demand for essential consumer supplies. Initially, there were reported shortages of medical gears and equipment for safety against coronavirus. Lately, news have surfaced about the shortage of toilet papers in the market.

The precautionary steps in avoiding coronavirus emphasise on maintaining healthy living style and proper hygiene. The preventative measures issued by WHO urges to regularly and thoroughly clean One’s Hands With An Alcohol-Based Hand Rub Or Wash Them With Soap And Water.

But What Is Panic Buying?

Panic buying forms a part of the consumer buying behaviour, where they purchase large volumes of products in situations of projected uncertainties about the price increase of the product or shortage in supply of the product. This low supply can also be a deliberate attempt from the supplier’s end in times of very high demand for products from consumers to fetch higher prices.

Panic buying is a prominent behaviour by the consumers in situations when people start making huge volume purchases for products out of ambiguity as well as possible out of greed. It is a situation where a consumer would buy anything and, in any volume, just because of the strong ambiguity and uncertainties.

Also Read: How to Prepare for Coronavirus: Protective Measures and Myths

Panic Selling in Equity Markets

The worsening situation of the virus outbreak has even led to panic selling by the investors. Now, panic selling is a situation where an investor sells his investment as the market witnesses a sharp plunge in the prices of the stocks as well as commodities.

With slashed global growth projections, governments and central banks are introducing monetary reforms and fiscal stimulus packages. However, with crushed consumer confidence and investors’ sentiments, the market participants continue pressing Sell Button in the equity markets across the globe.

The fear of incurring losses from the investment, the urge to liquidate the holdings irrespective of the trending price and secure whatever is left out of the invested money often leads to panic selling.

It may result in investors opting for safer investment options like gold, depending upon the severity of the selling trend at a point of time.

Also Read: Market Seeks Safe Haven Shelter Once Again, Coronavirus or Overvaluation

The mounting worries for investors in the midst of coronavirus spread have led to a historical sell-off from the investors in the last ten days. Markets are struggling and haven’t been able to gain stability..

Few market experts believe that the act of such a severe sell-off is an overreaction by the investors as the coronavirus disease can be tamed. Notwithstanding pearls of wisdom like these, investors look like increasingly sceptical.

The S&P/ASX 200 did show some signs of strong recovery on 10 March 2019 with a growth of 3.01% and the majority of the sectors closing in the green zone.

However, the S&P/ASX 200 dropped 3.73% on 11 March 2019 and settled at 5,725.9, positioning ASX at a level where it was during January 2019. The same was noted trading comparatively very high at 7162.494 on 20 February 2020. However, S&P ASX 200 continues the free fall, settling 5.8% lower on 12 March 2020 to 5413 points.

The plunging investor confidence is in parallel trend with the mounting ambiguities for the consumers. On one hand, stocks are reaching their fresh lows, and on the other hand, consumers are stuck with the misty image for availability of the life-essential supplies and remain ambivalent.

Falling Consumer Sentiment

These situations of panic buying and panic selling among consumers and investors respectively are validated by the Westpac-Melbourne Institute Index of Consumer Sentiment that reflected a fall of 3.8% to 91.9 in March from 95.5 in February.

Consumer sentimental index

With this, the Consumer Sentiment Index has fallen to a five-year low, primarily driven by the worsening coronavirus outbreak and an associated rout in financial markets, notwithstanding RBA’s 25bp rate cut and the move by major banks to reduce mortgage rates by the full 25bps.

The survey by Westpac reported an important observation highlighting the notion that virus-related disruptions are expected to be significant but for short-term. This is supported by the investors raising concern about the near-term outlook of the economy and are less anxious about the long-term view of the economy.

There is a dire need to address the current crisis due to coronavirus at almost every aspect of human life. RBA’s next meeting is scheduled for 7 April 2020, till then it will be worth noting if the investors can manage to lower their anxieties and manage to put a limit to the falling markets and support its growth.

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