Impact of SARS 2003 and Coronavirus 2020 on Global Stock Market

sars coronavirus stock market

SARS and Coronavirus could be from similar family of virus but occurred at different timing of market cycle optimism, having different risks to global economy and stock market.

SARS started in late 2002, near to low optimism of global stock market after burst of Year 2000 Dotcom bubble, ending around mid 2003, so impact to stock market is limited. After ending of SARS, regional and global stock market start to recover.

Coronavirus started in late 2019, near to low optimism of China stock market but at high optimism of global stock market (US, World). Currently global/US stock market are mainly supported by US presidential election year with strong US economy, especially with cease fire of US-China trade war and end of impeachment on Trump.

Relatively, potential risk of Coronavirus to global stock market is greater than SARS mainly because:
1) Higher optimism level of global stock market, more potential to fall down when there is a black swan
2) Contribution of China to global economy in Year 2020 (15% world GDP) is 3 times more than in Year 2003 (5% world GDP)
3) Spreading of Coronavirus is faster than SARS, despite fatality rate is lower, total number of death (and therefore fear) could be more if dragged much longer without an effective medical solution

Therefore, the 2 main X-factors are mainly US election results (affecting US market, especially if Trump not elected or behind in winning rate) and severity and duration of Coronavirus (affecting China / Asia market).

Shorter term trading on more bullish US stock market (achieving new historical high again recently) is relatively safer. For China/Asia market, short term recovery could be cyclic in nature, could be suppressed when there is new unknown negative news of Coronavirus.

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