Though you wouldn’t know it by the market reaction — the Nasdaq hit a new record high on Monday and the ASX 200 is up 0.5% in intraday trading today — the coronavirus is still spreading rapidly through China’s Hubei province.
The deadly virus has now officially claimed 1,013 lives globally. 974 of those deaths have been confirmed in Hubei. And the real toll may be far higher.
Beyond the tragic loss of life, the economic hit is also ballooning. With some 400 million Chinese now in virtual lockdown in an effort to isolate the disease, China’s economy is quickly losing steam. And the rest of the world is beginning to take notice.
Some obvious stocks to fall victim are ASX-listed travel related stocks, like Qantas and Flight Centre. Qantas is down 10.8% so far in 2020. Flight Centre is down 14.8%.
But the pain is likely to spread far beyond the tourist, education, and gambling industries…barring the rapid development of a vaccine. (Fingers crossed!)
Demand for Blackmore’s vitamins increases
Aussie health supplement firm Blackmores, for example, requested a trading halt yesterday. According to the release that’s ‘pending an announcement by Blackmores concerning its half-year results and outlook for the full year’.
The virus has actually seen an increase in Chinese demand for the company’s vitamins. But it seems the travel ban between Australia and China has stymied the popular ‘suitcase trade’. Blackmore’s share price had fallen 8.5% since last Wednesday before trading was halted.
While the broader market is in the green today, now is not the time to be complacent. Be sure to review your risk management. And consider decreasing your exposure to stocks heavily reliant on Chinese consumers or suppliers.
Ed note: While many stocks may have some healthy gains ahead yet in 2020, The Rum Rebellion editor Vern Gowdie is convinced these five stocks are NOT among them. Find out which stocks he recommends you sell IMMEDIATELY…and why…in this free special report here.