It's hard to escape the headlines regarding the Corona (Wuhan) virus. The fearful sentiment has worked its way into financial markets in the form of volatility. There will be a negative impact economic to China to global GDP in for short run. We are fortunate, (or unfortunate), have multiple cases to compare the economic and financial impacts of the Corona virus with previous outbreaks including SARS and Ebola. The good news is that the path to normalization is faster than most would expect.
Eric Lascelles, Cheif Economist for RBC Global Asset Management economic impact of of the Wuhan virus and looks at the potential impact to US securities based compared to SARS, H1N1, H7N9 and Ebola. Click here for the full 3 page report
Here are the key takeaways from Eric Lascelles:
At this time, all indications suggest that the measures being taken to stem this outbreak should prove helpful in mitigating the global health risk. That said, it’s early days and headlines may continue to draw attention to these risks as more cases are announced. While markets have begun to react to these concerns, our base-case scenario is that this outbreak is contained and doesn’t have a large-scale impact on the global economy. We remain on alert for signs of an increase in the severity of this outbreak and will adjust our forecasts accordingly should conditions necessitate.
When market volatility increases, there is a tendency for even the most experienced investors to become overly focused on short-term movements. Often, this can lead to hasty decisions that interfere with the long-term objectives of your investment portfolio. The key to avoiding these knee-jerk reactions is for investors to focus on the financial plan they have in place. Day-to-day market fluctuations, particularly those driven by health scares, are likely to have little impact on long-term investment strategies. Maintaining perspective is key to remaining on track.