Jody Jonsson, portfolio manager at Capital Group, said that it’s clear investors are now taking this outbreak more seriously.
“The market is starting to consider what it means for global trade and travel. The bond market is worried about recessionary conditions in certain areas, including China, Japan and potentially Europe. The impact on the U.S. economy is harder to determine. In some ways, the impact is greater on certain companies outside of China — obviously, airlines and cruise companies fall into that category.
“But it’s also providing a boost to some industries, especially e-commerce and gaming companies. As more people stay home, you’re seeing massive increases in the consumption of home entertainment and online shopping activities.”
The company’s economist, Stephen Green, who is based in Hong Kong, believes things are a lot worse than markets initially thought.
He added: “The equity market is underpricing the supply chain disruptions that are now building. We still have a long way to go in terms of people getting back to work in the big cities, and local governments are under a lot of pressure to get their economies going again.
