Market volatility and Coronavirus (COVID-19)

I’ll make this short but wanted to comment on concerns around the Coronavirus disease (COVID-19)

In relation to the health issue:

  • Transmission rate of about 2.6 newly infected from 1 case.

  • Fatality rate of about 2.5%.

  • The health risk is significant, much more severe than the standard flu, but not as severe as some early concerns.

In relation to the timeline and economic impact:

  • It appears that China’s government has enacted measures that have slowed down the spread of the virus there.

  • Slowing down the spread of the virus in other populous nations is critical. This is the current concern with new outbreaks recently.

  • It will take time for the full economic impact to be understood as Governments react and as people’s daily routines and spending habits change.

In relation to the volatility in financial markets:

  • There will be buying opportunities in the coming weeks as markets react further to the situation.

  • I would not be in a hurry to add stocks at this point but prefer to be patient and take a wait and see approach.

  • I would hold existing cash awaiting opportunities.