For everyone else being blindsided by the Coronavirus news, I’ve been trying to research how outbreaks have affected previous stock-markets. I have somewhere between 20-25% in “emerging” and foreign markets and I’m down a bit from last week. Here are some articles I have found.
“What happened to stock markets during previous pandemics?” 2006 study. Results varied but showed in these countries could easily fall 5-20% but overall sustained their losses and in the coming year rose once again.
“H7N9 not only endanger human health but also hit stock marketing” Focuses on the markets around food and avian flu specifically, but noted that the Chinese government’s reaction to the possible outbreaks involved rippling through food and consumer markets.
“THE GLOBAL ECONOMIC AND FINANCIAL IMPACT OF AN AVIAN FLU PANDEMIC AND THE ROLE OF THE IMF” From the IMF in the midst of the 2006 Avian flu outbreak, but involves some data sets from previous outbreaks. Two notable quotes.
Financial systems may confront an abrupt increase in risk aversion, with a corresponding surge in demand for liquidity. At the same time, large changes in asset prices and widening of credit spreads—for both corporations and emerging markets— could put banks’ balance sheets under stress and challenge institutions’ ability to maintain prudential ratios within regulatory norms.
Pandemics may come in waves, spreading over weeks or months. Some waves may appear mild only to be followed by another, more severe outbreak. Financial institutions, therefore, must have BCPs that do not focus only on a single, short-lived event.