Markets Have Three Virus Scenarios to Consider
A model published by the World Health Organization in 2017 that estimates the economic fallout from pandemics should give investors comfort.
Coronavirus fears have slammed Wall Street.
Photographer: Mario Tama/Getty Images
The coronavirus seems to be near the tipping point of becoming a global pandemic. The next few weeks may see infection rates peak for the virus that causes a lung illness dubbed Covid-19 and start to decline, aided by containment efforts and warmer weather in the Northern hemisphere. It seems just as likely that won’t happen, which means that in addition to humanitarian concerns, investors have to think about the impact on their portfolios.
There is a tendency for investors to concentrate on the direct short-term effects. Fears of contagion have already caused the cancellation of travel and events in parts of the world, and disrupted supply chains. This will have significant impact on first-quarter earnings and the global economy even if the virus is contained by the end of March.