Covid-19 Crisis : Everything Is Unprecedented
|image credit to newscientist.com|
In the past few months, we have seen the significant impact on Covid-19 pandemic to our economy and life in general. The world economy suddenly stops due to lockdown, the stock market plunged into a bear market in fastest speed. We have many unprecedented things happened recently, oil future dropped to negative territory, US jobless claims hit 30 mils in just six-week after lockdown, the unlimited stimulus plan (money printing) from world central bankers, world country’s PMI plunges to record low etc…
Negative Price Of Oil Is Telling Us That Something Else Will Break Next <Source:Forbes.com>
US jobless claims hit 30m on coronavirus lockdowns <Source:FT.com>
Federal Reserve vows "unlimited" stimulus to halt coronavirus recession <Source:Cbsnews.com>
Flash eurozone PMI plunges to worst-ever reading in March <Source:Marketwatch.com>
Will Covid-19 Have A Lasting Impact on Environment?
Covid-19 pandemic is bad for the world economy in general and particularly for those being affected directly, like loss of job or worst still loss of life. This virus outbreak has changed the way we live, work or perform our basic day to day functions, even as routine as going to the supermarket.
The World has come to a virtual standstill, with the majority of countries in some kind of lockdown, at least some assume that this is good for the environment.
Streets are empty, cities are silent, factories are closed and skies look blue and clear. Surely this has to be good for the environment and it has been talking in the media about the potential climate impact of the COVID-19-related shutdown.
Besides the economic impact, Covid-19 seems giving environmentalist a reason to believe and celebrate that world pollution has improved, mother nature is healing amidst global lockdown. But for how long?
People in India can see the Himalayas for the first time in 'decades,' as the lockdown eases air pollution.<Source: CNN.com>
Deserted Thai beaches lure rare turtles to build most nests in 20 years<source:ChannelNewsAsia.com>
From 'Unfit to bathe' to 'Safe to drink': COVID-19 lockdown improves Ganga water quality rapidly<Source:IndiatvNews.com>
NASA satellite sees air pollution drop over the northeastern US amid coronavirus outbreak<source:Space.com>
Blue skies and clean air in Los Angeles after coronavirus lockdown <Source: CBSNews.com>
We hope the pandemic will get over soon so that we can go back to our “normal life”, but once more and more countries re-open the economy after the crisis is over, we will never see the blue sky again and the beautiful view of Himalaya from north India will disappear again.
The world will never compromise economy growth for a better environment, no matter how hard we try. We only can have this kind of impact or improvement in our environment because of this “Covid-19 “ virus BUT with enormous sacrifices, inconvenience and loss of life.
But that’s the cruel reality, we can’t have the cake and eat it too, guess the world would have to find a balance on economy growth vs environment eventually. This will continue to be a never-ending topic for discussion and debate among environmentalist vs world leaders/politician.
Ok, back to market and investment. I think most of the investors were caught completely by surprise with this strong and quick rebound after the market touching low on 23rd March. STI dropped below -2SD on that day and rebounded strongly subsequently, and it only touches -2SD three times for the past 30 years i.e during 1997/98 ( Asian Financial Crisis ), 2008/09 ( Global Financial Crisis) and of course this time around Covid-19 world pandemic.
STI rebounded almost +18% from the low while US Dow Jones Index showed a much stronger rebound with +30% from the low. The market responded positively to “unlimited” monetary expansion from world central bankers and “unprecedented “ fiscal stimulus programs from governments all over the world.
We have seen so many predictions or forecast about the market’s direction from analyst all over the world, but I think all are just a “ guesstimation “ base on their own opinions. Some said “V” some said “W” or “U” shape of the recovery. Let me also join the party for fun to predict the recovery pattern….I don’t know what we called it, but is a long tail V with much longer downward and with shape/strong recovery eventually. :D
We start to see more and more ugly data from the economic front including PMI/ Exports figures as well as GDP. Some companies start to show the weak result in their latest earnings reports and some will only see their impact when they announce their 1st half 2020 result.
For the next 1-2 quarters, we may see more and more companies try to conserve cash or have equity fundraising with placement / right issues or issuing bond to boost their balance sheet. Many companies will have to cut or totally suspend their dividend pay-out to conserve cash in preparation for long and challenging battle ahead. Worst still, some weak companies may have to file for bankruptcy, for those non-strategic that will not be getting support or bailout from the government. Not many companies will be as “lucky “ as SIA and not all companies are created equal.
As investors, we must always :
Be ready to receive a “shrinking Panadol “ while companies start to cut or even stop paying the dividend.
Be prepared to have some sort of “Equity Fundraising “ from the company you have invested.
Be emotionally strong to face another “ lower low “ as what has been predicted by some TA gurus.
…..and of course, the most important …be diversified.
|image credit to change.org|