Coronavirus And Its Impact On The Finance Industry

Businesses all over the globe are facing the brunt of a spike in the incidence of coronavirus disease. The coming of this fatal respiratory infection from the central Chinese city of Wuhan has led to devastating in the world of finance. Because the epicenter of the disease is in China, many financial enterprises and ventures that opened bases in the country or had plans to do so are badly hit. As a result of the fact that many of their workers have already been exposed to the virus coupled with the travel bans by the government, the banks are not operating.

The Impact On Finance Industry

HSBC is one of the coronavirus outbreak is Fidelity International. An investment manager controlling assets of almost $600 billion, it is also telling its workers in China to work from home. As for Allianz (DE:ALVG) Global Investors, the investment arm from Germany overseeing assets worth almost $600 billion, it has given out instructions to its workers to stop traveling to the areas where the virus has the greatest impact.

The global financial market is taking a big hit as the Covid-19 is spreading from China to Europe, the Middle East and North America leading to panic relating to a global pandemic. Some economists are even of the opinion that it can lead to a global recession eventually.

Comparison With The Past Disasters

The coronavirus outbreak has been compared with the SARS outbreak in 2003 which also led to a massive slump in markets especially across China. The difference here is that coronavirus is affecting the financial market on a truly global scale. The severity of coronavirus is worse than the one of SARS because of the timing. Because it broke out around the time of the Chinese Lunar New Year is most tragic.

One other reason why the impact of the virus on the global financial market is very serious is because of the place of China in the global economy. China now represents over 15% of global GDP so whatever happens, the Chinese market will have a ripple effect across the globe.

This viral outbreak triggered the swiftest drop in the stock market since the Great Depression of 1933. Wall Street recorded a slump that was the lowest since 2016 which amounted to a loss of well over $5 trillion on the global market in just a week in the last week of February 2020. The same week saw the worst one-day fall ever for Wall Street as the Dow Jones Industrial Average slumped by 1,190 points.

As the Financial Times Stock Exchange 100 plunged by 823 points in less than a week which translated to a loss of £206billion of the top 100 enterprises to close at 6,580.61 points. Brands like EasyJet and IAG (LON:ICAG) (owner of British Airways) were some of the worst-hit while Carnival (NYSE:CCL), operator of the Diamond Princess cruise ship which was hit by the virus lost 20% of its stock market.

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Closing Remarks:

With Corona Virus’s continuous spread to other countries, it’s a chapter far from being closed. And until there is proper solution available, the financial markets will continue to get hit, especially the Stock Markets.

Written By: Dawn richard