Monday, March 02, 2020

Asian stocks and the virus

Data as of last Friday, Feb. 20, 2020, I was curious -- the year to date (ytd, ie from Jan. 1 to Feb 28) stocks, TH, ID and PH have worse performance than CN Shanghai, Shenzhen and HK?

Some friends offered various explanations.

1. Albert: China propped up its market. Massively.

2. Peter: You can't really compare the 2 markets directly. The Chinese markets are so much bigger and more important. They have capital that is a lot more patient and more importantly local as well. If you look at our regional counterparts its as if we are completely in sync. The main reason is that our Equities markets are all really small, so a few funds pulling out is all the diff that is needed. Seriously just a billion or two (dollars) can lower the indeces in these markets. It's got to do the liquidity since a lot of these companies are also family or gov't owned so they'll never sell. With a small float, there is more volatility. Hence the big drops as funds pull out their money from emerging markets.

3. Ramon: China also added billions of dollars in liquidity (a QE of sorts) to stall the decline.

4. Bernard: Governance issue: Duterte rants vs water companies (MVP group, Ayala, DMCI) and ABS-CBN quo warranto.

5. Josef: Mas matinding virus si Duterte kaysa COVID19.

And this story,

China gives relief to shield trillions of yuan in bad debt

Today, Asian stocks have somehow recovered, hope this will continue. I think now that this Covid scare is overrated, hysteria fanned. When the dust would settle, I think it would appear that it's no different from the usual annual flu season in the northern hemisphere that kills thousands of people.

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