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…



  
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?











 


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



Cheers !

Comments

  1. Does that mean we also will need unprecedented investing strategies and war chest to invest through this COVID-19 crisis?

    ReplyDelete
    Replies
    1. Hi Uncle CW8888, Yes, indeed, we need unprecedented strategy to use our war chest like you... have a really good discipline on how to use the war chest and buy at bottom :D..👍🙏🙏 Cheers

      Delete
  2. Hi, can I ask which software you use to gather the standard deviations? Thansk

    ReplyDelete
    Replies
    1. Hi Jo,
      I use the excel to plot the chart..if you want to know how to plot, just drop me a mail (@ stesg50@gmail.com) I can forward the sample file to you. Cheers.

      Delete
    2. what does reaching each level of SD means? -/+ 1SD , -/+ 2SD, etc

      Delete
    3. Hi FC,
      It just mean that the price are deviating from long term mean level, a +ve +1sd or +2sd mean price are above long term mean level and it might signal a over-valuation for market. But as mentioned in my previous blog post , SD is just a statistical phenomena and market may stay higher or irrational for quite sometime even after hitting + or - ve 2SD... such black swan (or outlier ) event may happen from time to time. Using SD to determine the valuation of market is just a probability not certainty.
      Hope this clarify. :D
      Cheers !!

      Delete
    4. thanks STE. understood that it just a probability not certainty.

      so, the SD is based on all the inputs that the user has? ie, from first input to last input,
      or is there a specific period eg 30D MA, 90D MA etc , moving average for a specific timeline.

      Delete
    5. Hi FC,
      FYI, the data is the closing index as of date..not base on moving average , once we have the price data and range (date), excel formula will calculate the mean level for each time frame (date ) base on data range we have inputted and it plot a mean line , from there we extrapolated using SD formula to insert the SD line.
      Hope this clarify.
      Cheers !

      Delete
  3. Thanks for sharing this Information. Its quite different from other posts. If u looking for more updates about coronavirus, visit
    Global Status of COVID-19

    ReplyDelete
  4. Hi Hendra/Jaren/Bernard/H/Xiaoan/kok/Henry/Jo/Guoan

    As request , have forwarded the sample file of how to plot the regression line to you all separately.
    Hope is useful..
    Cheers ! :D

    ReplyDelete
  5. Thank you STE for another analytical article in this trying time.

    ReplyDelete

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