Coronavirus Recession

Coronavirus Recession

Since the outbreak of coronavirus in January, many people asked me what would be the most potential investment opportunity in 2020. Naturally, selling surgical mask is a quick-buck business but you might not want to stock up millions of masks in a warehouse and go around town canvassing for sales.

Back in 2003 when SARS attacked the Asia region, it lasted for about 6 months before effective vaccines were introduced to contain the virus. During that period of chaos, uncertainty and turbulence in market had pushed Gold prices into stronger recovery trend following the 911 sabotage. Meanwhile, the Dow market was also surging as flight of funds escaped from Asia and sought haven in U.S. market.

Today, we have seen the U.S. Dow benchmark seeking new historical high due to fund flowing out of Asia markets. The fear of coronavirus epidemic has deterred many investors from putting monies into the Asia markets. At the current moment, there are reports that reveal retail sales have slid as much as 50 percent in China shopfront businesses over just one month. Next is Singapore as being the second largest infected country after China.

Looking at the current situation, all wise investors must be prepared to see a dynamic slowdown in economic growth in the China-ASEAN region for at least 6 months or even longer. No one knows how long this will last but it will definitely take a beating for many business sectors like transport, F&B, hospitality and shopping, tourism related classes to swallow the anticipated losses.

This year, much market focus is staked at the roll-out of 5G technology in China and some regions in ASEAN and Europe. We believe the transformation of telecommunication will slow down due to the virus outbreak. However, the recovery and rapid growth in following year could be humongous once the virus can be contained, and provided China manages to stay in the frontline of 5G telecommunication network and related hardware.

While people are eagerly eyeing on the potential investment opportunity in Gold prices as hedge haven, Crude recovery from OPEC’s deeper cut, and the persistent propeller in U.S. stock market to make new highs, we would be more cautious to avoid some market sectors that will be largely affected by the hard-knock hammering of coronavirus spread. Therefore, steer away from investing in airlines, transport companies, retailing groups, hotels and hospitality groups, F&B groups, manufacturing exporters, commodity producers and exporters, banking etc.

As the Belt-and-Road-Initiatives is expected to be stalled for a while, business lending and building of infrastructure will slow down tremendously this year. On the other hand, the potential of raising and further growth in semi-conductor manufacturing related to 5G technology have been expected to surge over this year to 2021.

While there is a recession, there could be another hidden inflation somewhere and need to be unraveled. In 2020, there could be many more black swans coming our ways and being led by the post-BREXIT and conflicts of Middle-East nations. Stay put for the next update with us.

~ DAR Wong is a veteran in global financial markets and regulated professional in Singapore. The opinions are solely at his own. He can be reached at apsrico@gmail.com