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
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