NEW YORK—The outbreak of the new coronavirus has had a significant impact on the world’s economy, disrupting industries across multiple sectors and contributing to heavy losses in stock markets worldwide.
Plant closures in China have disrupted the automotive industry’s global supply chain, and the airline industry predicts a $29 billion dollar loss in revenue this year as a result of falling passenger demand.
Several towns in Italy are on lockdown, and South Korea’s government is ready to use emergency measures as more cases emerge. Fears of the virus spreading further into Europe and Asia has contributed to major losses in U.S. and European stock markets, including nearly a 3,600 point drop in the Dow Jones Industrial Average this past week.
“Right now what you’ve seen is this incredible movement, which we always see, towards safety because it just feels out of control,” Chris Burns, founder and CEO of Dynamic Money, told NTD.
“Nobody knows what’s going to happen. Nobody can accurately predict exactly what’s going to happen with the coronavirus, and so that leads a lot of people to [say], ‘I want safety. I want security. So I’m just going to move my money out.’ The only problem is, that can be really harmful long-term to your portfolio,” he said.
In a time with so much uncertainty in the market, Burns said many would choose to invest in gold or U.S. treasuries because they are safer assets, despite having low returns.
“Anytime you see people flooding the treasuries market for instance and seeing that kind of benchmark ten-year yield drop, and we just dropped to the lowest it’s ever been, you can get a feeling for how anxious are people right now,” Burns said.
In addition to the stock market, several industries have lost revenue as a result of the coronavirus outbreak.
The industries hit hardest in the short term are tourism, transportation, and international retail, Burns said. However, technology companies that source their parts from China may be hit hardest if the supply chains aren’t restored by the time their inventories run out.
According to Burns, the coronavirus may add to the reason why companies would reconsider doing business in China.
“We have significant issues with [China], the way they’re controlling their economy. Everything from blackmailing U.S. businesses for intellectual property, to subsidizing their own businesses to a host of other issues,” he said.
“There’s an opportunity here for other countries that want part of that manufacturing business, for instance, to [say], ‘hey, not only are you having issues with China because of their laws and the way that they’ve run their markets, but you also have this virus coming out of China, maybe a safer place to go would be here,'” Burns said.
Follow Kevin on Twitter: @KRHogan_NTD
