Novel coronavirus pneumonia epidemic accelerated global spread, international market opened up a risk aversion mode

category:Finance
 Novel coronavirus pneumonia epidemic accelerated global spread, international market opened up a risk aversion mode


Earlier, the market only worried about the downturn of Chinas economy and the disruption of the supply chain caused by the outbreak, but as the spread of the epidemic overseas accelerated, investors began to worry about the further impact on the global economy. Xu Changtai, chief market strategist of Morgan asset management in Asia, told the first financial reporter, although the selling range is huge, there are large differences between different sectors. The sectors of consumer necessities, utilities and real estate are more resilient, while the sectors of energy, materials, industry and optional consumption are greatly affected, because investors are worried that the epidemic may impact the cyclical growth prospects.

Novel coronavirus pneumonia Georgi Ieva, President of the International Monetary Fund (IMF), also said that IMF will reduce its global economic growth forecast in 2020 from 3.3% in January this year to 3.2%, due to the impact of the new crown pneumonia epidemic. She believes that although the impact of the epidemic continues to be apparent, the WHO assessment is that through strong coordinated measures, the spread of the virus in China and around the world can still be curbed.

Who director general Tan Desai said Thursday that the epidemic has not yet constituted a global pandemic, but countries should be prepared, what we see is that the epidemic affects countries in different ways around the world, and targeted response measures are needed.

Global spread of the epidemic

Globally, in terms of determining the number of patients with new crowns, as of the 24th, who data showed that there were 2069 confirmed patients with new crowns (an increase of 300 per day) and 23 deaths (an increase of 6 per day) in the world. This data changed again on the 25th, among which Italy and South Korea increased significantly in number.

As of the first financial reporters press release on 25th, 283 cases of new coronavirus pneumonia infection have been confirmed in Italy (the data of who on 24th is 124, an increase of 146 cases per day), and 7 deaths have been confirmed in total, among which Palermo, the city of Sicily in southern Italy, has been confirmed for the first time. Currently, 850 cinemas are closed in Italy.

The novel coronavirus infection reached 977 at 25 oclock in the morning, as of 16, when the data were 763, increasing by 254 on WHO24, and 10 people died, according to the Korean health department.

From a regional perspective, there is no significant change in North America, Europe (except Italy), South Asia, Africa and other regional infectious countries, but in the Middle East, Oman, Iraq, Kuwait and Bahrain reported their first confirmed cases of new coronavirus infection on 24 days; Iran confirmed 95 cases on 25 days, and 15 cases died. According to the latest data, there are about 2500 new coronavirus patients confirmed worldwide.

At present, we have not seen the global spread of this virus, nor have we seen large-scale serious diseases or deaths. Does the virus have pandemic potential? Absolutely. But are we at this point? According to our assessment, not yet.

Now the epidemic affects different countries in different ways in different parts of the world, and we need to take targeted measures. The sudden increase in new cases is indeed worrisome, but the use of the term pandemic now is not true, but it almost certainly causes fear. Its not the time to focus on what words to use, and focusing on it wont stop infection or save lives, Mr. tandesay said.

Michael J Ryan, whos executive director of the emergency health program, also explained at a press conference that there are already a number of countries spreading diseases to the outside world. Its time to make every effort to prepare for the global epidemic, but its too early to declare it a global epidemic.

Global market opens safe haven mode

The main reason why the capital market has changed its optimism in the past few weeks is that the focus of investors has begun to change. Paras Anand, chief investment officer of Fidelity International Asia Pacific, told reporters that in the past, when there was a public health emergency, the market would recover again after the initial fluctuation, and SARS and H1N1 did go out of the same law.

However, the biggest difference this time is that the two outbreaks occurred after the bear market which had already accumulated a large decline. For example, the former is the Internet bubble burst, the latter is the global financial crisis, but we are now in the bull market with the longest history. In addition, at present, corporate profit prospects continue to deteriorate, but investors expect that the government and the central bank will provide sufficient liquidity to the market to mitigate the impact on the economy and short-term asset prices. However, as liquidity pushes up asset prices repeatedly, valuation also rises to a significantly higher level, and natural markets will adjust.

From the decline of US bond yields and the strength of the US dollar, it is not difficult for the strong risk aversion sentiment of the market, the stock market will remain volatile in the near future, which is also due to the rise of new cases in the world. He said.

But a strong dollar itself can also add to global market pressure. Robertson, head of global macro strategy of Standard Chartered, told reporters: the sharp rise of the US dollar makes the market worry about the resilience of the global economy, and a strong US dollar will lead to a tightening of the financing environment. Although we can see some optimistic signs of epidemic prevention and control, the concern of the market is that the strength of global recovery may not be as strong as expected, and the subsequent market may face the reality of continued economic downturn. He said that the euro recently hit a new low, and its weakness will make the selling of the dollar difficult to achieve. The more critical issue is that the weakness of the euro is more endogenous. The latest data shows that the industrial production data of Germany and Italy in the fourth quarter of last year were weaker than expected, and the dovish argument of the European Central Bank began to rise again, with the discussion of interest rate cut supporting the economy rising.

However, the agency also suggested that the development of the epidemic should be analyzed more rationally at present. Drawing on Chinas experience in the past few weeks, we need to look at two major factors to determine whether sentiment in the market has stabilized - first, the number of new infections needs to start to decline, which indicates that the protective measures taken by the global government have begun to work. Second, the policy actions of the central bank and the government are crucial. Xu Changtai said.

We are also looking at a more serious scenario, which is that the spread of the virus lasts longer, the global spread is wider and the impact on economic growth is more lasting, Georgieva said on Tuesday during a meeting of G20 finance ministers and central bank governors Global cooperation is essential to contain the new crown and its economic impact, especially when it is more persistent and widespread, said Georgieva. To be fully prepared, we should now identify the potential risks faced by vulnerable countries with weak health systems.

The post meeting communiqu u00e9 of the G20 finance ministers and central bank governors meeting showed that countries expressed the need to strengthen global risk monitoring of the epidemic and stand ready to take further actions to deal with the risk.

In the recent winter economic outlook 2020, the EU pointed out that the presumptive baseline of the EU is that under the current situation, the impact of the new coronavirus epidemic on Chinas GDP mainly refers to the first quarter, but its global spillover effect is relatively limited.

The Oxford Institute of economics, a British think-tank, made a series of scenarios for the current new crown epidemic. The Institute pointed out novel coronavirus pneumonia in the forecast of the global economic baseline will have a huge but temporary impact on the economy: the outbreak will reduce the global gross domestic product (GDP) growth to 1.9% in the first quarter of this year.

However, the Oxford Institute of economics is careful to say that there is a high degree of uncertainty. After studying the longer-term economic data schedule, the Institute concluded that it would take at least two months to see clearly the short-term impact of the outbreak on the economy.

A shares show resilience, RMB test rebound

The weeks performance of a share capital is in contrast with that of the international market. In fact, after the sharp fall on February 3, a share has almost constantly stabilized and rebounded. In the face of the recent overseas fluctuations, it is also calm.

On Tuesday, A-shares rebounded in a V-shape, with turnover breaking through another trillion yuan, with the Shanghai indexs decline narrowing to 0.6% from nearly 3% in the session, and 3000 points recovered. By the end of the day, the Shanghai Composite Index fell 0.6% to close at 3013.05, falling 2.88% to 2943.8, the Shenzhen Composite Index rose 83.7 points to close at 11856.08, and the growth enterprise market index rose 1.03% to close at 2287.31.

Chinas novel coronavirus pneumonia KristinaHooper has told reporters that the new infection rate has dropped as the situation in China is beginning to improve. More factories are about to return to work. The rate of return to work is on the rise. Chinese stocks and global stocks, which account for a large proportion of Chinas revenue, could be an attractive buying opportunity.

A number of domestic fund managers interviewed by reporters said that in the future, the structural character of growth stocks will continue to outperform. Relaxing refinancing can effectively improve the financing ability of listed companies and relieve the liquidity pressure in business operation, especially the growth companies represented by small and medium-sized enterprises will benefit more. In fact, the stronger trend of growth stocks since the end of last year is that the refinancing policy is expected to loosen.

In the future, the governments supportive policies can play a buffer role in the slowdown of economic growth, thus determining the direction of risk assets. China will still introduce more policies, and fed chairman Powell has made it clear that he will pay close attention to the development of the situation, which I think means that the Fed is ready and willing to make insurance rate cuts when necessary, he said

Institutions generally predict that Chinas reduction of the standard and interest rates is expected to continue, and this years fiscal stimulus is expected to increase. In 2020, the official budget deficit rate may further increase to 3% from 2.8% in 2019, and the amount of special bonds issued by local governments may increase to about 300 billion yuan from 2.15 trillion yuan in 2019. At present, the government has issued some financial and tax support measures to help small and medium-sized enterprises cope with the impact of the epidemic.

It is worth mentioning that the RMB was expected to face a large selling pressure this week, but on Tuesday, the RMB remained stable and tried to rebound. As of 19:00 on the 25th, the offshore RMB was close to USD 7.0272, basically the same as the previous day. In the future, it remains to be seen whether risk aversion will continue. Liu Min, an analyst with fxtm Futuo China market, told reporters that gold, as the most popular safe haven asset in the near future, fell sharply on Monday after recording this round of new highs, and the daily chart formed a shooting star trend, indicating that there was a certain selling or closing price above. In addition, the U.S. dollar index showed signs of falling from its high on Friday and set a new low on Monday. At the same time, the euro / dollar daily chart also shows the bottom rebound demand. Whether the risk aversion mood has come to an end, or whether the market finally recovers the risk aversion in the swing, is worthy of attention in the next few days. (Li Xinjie, the first financial intern journalist, also contributed to this article) source: First Financial Editor: Guo Chenqi, nbj9931

It is worth mentioning that the RMB was expected to face a large selling pressure this week, but on Tuesday, the RMB remained stable and tried to rebound. As of 19:00 on the 25th, the offshore RMB was close to USD 7.0272, basically the same as the previous day.

In the future, it remains to be seen whether risk aversion will continue. Liu Min, an analyst with fxtm Futuo China market, told reporters that gold, as the most popular safe haven asset in the near future, fell sharply on Monday after recording this round of new highs, and the daily chart formed a shooting star trend, indicating that there was a certain selling or closing price above. In addition, the U.S. dollar index showed signs of falling from its high on Friday and set a new low on Monday. At the same time, the euro / dollar daily chart also shows the bottom rebound demand. Whether the risk aversion mood has come to an end, or whether the market finally recovers the risk aversion in the swing, is worthy of attention in the next few days.

(Li Xinjie, the first financial intern reporter, also contributed to this paper)