COVID – 19 “infects” Global Markets (Part 1)
COVID- 19 commonly known as the corona virus is a pneumonia of unknown cause detected in Wuhan, China and was first reported to the World Health Organisation (W.H.O) country office in China on 31st December 2019. The outbreak has since been declared a public health emergency of International Concern. Consequently, the international community has asked for USD 675 million to help protect states with weaker health systems as part of its strategic preparedness and response plan. (W.H.O website, 28th February 2020).
Hopes that the epidemic that started in China would be over in months and that economic activity would quickly return to normal have been shattered as the number of international cases have spiraled. The virus has thus had a major impact on not just global health, but the global economy as a whole, as it has affected areas such as commerce, manufacturing and tourism among others.
Friday 28th February 2020 saw world share markets crashing, compounding their worst week since the 2008 global financial crisis and bringing the wipeout in value terms to $5 trillion. These fallouts are expected to have far reaching consequences as the global economy was already bearing the brunt of the fallouts from the US- China trade war.
The Chicago Board Options Exchange (CBOE) volatility index, often called the “fear index,” which measures the frequency and intensity of price changes of an asset over a specific period jumped to 39.16, its highest in about two years. This is a clear indication that volatility is high and further signifies the presence of fear and panic on the part of investors. To be continued………