Khaleej Times - Coronavirus: How trillions of dirhams were lost as a result of outbreak

Investors were in panic mode on Monday due to growing coronavirus concern, sending equity markets to multi-year lows across the globe and wiping out trillions of dirhams in market capital.

In the UAE, the Dubai Financial Market fell 0.8 per cent while Abu Dhabi lost 2.2 per cent. Investors in Dubai and Abu Dhabi lost $626 million (Dh2.3 billion) and $3.16 billion (Dh11.6 billion). While Saudi Arabia's Tadawul index lost 2.89 per cent or $68 billion (Dh250 billion) in the market on Monday.

Among other regional bourses, Kuwait, Qatar, Oman and Bahrain lost 1.7 per cent, 1.3 per cent, 1.0 per cent and 0.5 per cent, respectively. After the UAE, Oman, Bahrain and Kuwait also reported first coronavirus cases in the country, causing concern among regional investors.

Investors are tense as coronavirus spread to more countries while the death toll also mounted over the weekend. On Sunday, IMF officials told G20 leaders that that coronavirus puts global economic recovery at risk. Markets in the GCC, Europe and Asia lost well over $572 billion (Dh2 trillion) in market capitalization on Monday.

In the commodities market, oil prices also slipped in line with fall in equity markets. Brent was down $2.57 or 4.44 per cent to $55.37 while WTI had lost $4.48 or $2.39 to trade at $59.00 on Monday evening.

In the US, markets opened lower as benchmark Dow Jones Industrial Average stood at 28,191.85, down 2.8 per cent or around 800 points. The S&P 500 dove 2.6 per cent to 3,252.23, while the tech-rich Nasdaq Composite Index sank 3.1 per cent to 9,282.16 a few minutes after opening the trade on Monday.

Markets in Europe and Asia had even bigger losses as infections spread in Italy, Iran and South Korea.

In Asia, the S&P ASX/200 in Sydney lost 2.3 per cent to 6,978.30. Hong Kong's Hang Seng dropped 1.8 per cent to 26,820.88 and Thailand's SET index lost 2.5 per cent. India's Sensex lost 1.2 per cent to 40,689.12. Benchmarks in Jakarta, Taiwan and Singapore fell by more than 1 per cent.

In Europe alone, nearly $420 billion (Dh1.5 trillion) were wiped off the value of European stock markets on Monday. Britain's FTSE 100 sank 3.5 per cent to 7,147, while the CAC 40 in Paris lost 3.7 per cent to 5,806. Germany's DAX fell 3.6 per cent to 13,086. The FTSE MIB in Italy, which has seen a surge in new cases that lead to the lockdown of towns and businesses, dropped 4.6 per cent to 23,620.

Vijay Valecha, chief investment officer at Century Financial, said new cases reported from multiple parts of the globe including Middle East, South Korea and Europe have reignited fears of a global pandemic triggering a fall in risk assets.

"Situation outside China is now alarming with more disruption to global growth and trade flows more likely than ever. This is further likely to hit the oil prices hard with Opec likely to act with more dire urgency," said Valecha.

Fawad Razaqzada, Senior Market Analyst at Trading Candles, said clearly investors are in a panic mode right now which means there could be great opportunities to pick up shares of companies with good fundamentals on the cheap.

"But as far as the wider markets are concerned, waiting for the right opportunity is the key now for most investors. For experienced short-term traders, this jump in volatility must be great after what was a very quiet 2019. It is impossible to say when the panic will be over, or when the markets will turn around," said Razaqzada.

Nigel Green, CEO and founder of deVere Group, said global financial markets retreated on Monday as they reacted to the coronavirus headlines over the weekend. But it is likely that they will quickly rebound, as they have consistently done in recent weeks.

"Indeed, stocks keep on reaching record highs. This is because many investors remain complacent about the far-reaching impact of coronavirus, which is continuing to spread - and a faster pace. This will inevitably hit financial markets and investors' complacency leaves many wide open to nasty surprises," Green said.

Source: Khaleej Times