Investment Banks Generally Believe That The Long-Term Impact Of The Epidemic On Global Stock Markets Is Expected By Small Emerging Markets.

Williams also stressed that after the outbreak of SARS, the market also rebounded rapidly. "In the weeks of 2003, China's stock market made up for their losses."

At the beginning of 2020, the global market showed roller coaster market. Affected by the outbreak of the new coronavirus, the global stock market has plummeted. But in the past week, investors' panic was relieved by multiple positive news, and the weekly stock market in many countries rose.

In the past two weeks, the "new crown virus" is undoubtedly the focus of global attention. As the measures adopted by the Chinese government are taking effect and new cases outside Hubei province continue to decline, many analysts believe that the impact of the "new crown virus" will be short term and the long-term impact will be relatively small. In addition, the United States, Europe and other multinational economic data show bright, enhance confidence in global economic growth. This series of information has boosted the performance of us and European stocks.

Looking ahead to the next stock market in 2020, professional institutions and analysts believe that under the stimulation of loose monetary policy, the yield of emerging markets is higher than that of developed countries, and it is worth looking forward to.

The impact of the epidemic on the stock market is short term.

In the last week of January, the global market was down by a new outbreak of coronavirus. In the first week of February, the panic of investors cooled down as the Chinese government stepped up its efforts to stabilize the market.

According to the National Health Protection Commission of China, as of February 9th, the number of confirmed cases reported by the whole province except Hubei has dropped for 5 consecutive days, down 42.8%. In addition, the cure rate has gradually increased. In February, the spokesman of the national health and Health Committee, MI Feng, said that the cure rates in Wuhan, Hubei and even the whole country increased significantly at a news conference in 10. Among them, the cure rate was 8.2% in January 27th, 1.3% in January 27th, 6.1% in Hubei, 1.7% in January 27th, 6.2% in January 27th and 2.6% in January 27th. This shows that the effect of medical treatment in all parts of the country is beginning to show. At the same time, with the strengthening of counterpart medical support, various measures have been taken to increase the supply of beds, and the treatment capacity of Hubei and Wuhan has been significantly improved.

The above data boosted confidence in the market. Many analysts and strategists believe that the impact of the "new crown virus" epidemic on the market is only short-term. Mark Mobius, founding partner of Mobius Capital Partners, said the impact of the epidemic on the stock market would be "temporary". "The good news about the virus is that the whole world is watching it, and many scientists are studying the solution. Of course, China also put resources into the treatment and settlement of the epidemic. So I don't think it will be as long as people expected. " Mobius emphasizes.

Mark Williams, chief Asia economist at Capital Economics, points out that sentiment in the market has been improving. "This virus has certainly caused market sentiment to deteriorate sharply over the past few days. As long as the epidemic is controlled at some point, we will see the market pick up again. "

Williams also stressed that after the outbreak of SARS, the market also rebounded rapidly. "In the weeks of 2003, China's stock market made up for their losses."

Morgan's historical data also verify the above views. Data show that whether SARS, swine flu, Ebola virus (Ebola) or Zika, tracking the local stock market's MSCI index will recover the lost territory within one month after the peak of the epidemic, and continue to maintain an upward trend within three months.

Derek Scissors, chief economist of China's brown leather book, said that global stock markets may continue to rise because people realized that the new crown virus epidemic is unlikely to have a long-term impact on the market. "This is not a natural disaster to destroy capital stock. As long as people can fully restore their lives and work, they will not affect productivity. "

Macquarie Capital, director of Chinese economy, Hu Weihao (Larry Hu) said: "the lesson of SARS shows that only when the number of new infections begins to decline, market sentiment will have a turning point."

RBC Capital Markets global macro strategist Peter Schaffrik said, "the market situation is the re pricing of fear of the virus. People are now concerned about the spread of the epidemic: the number of cases is still rising, but the growth rate is slowing down. "

Morgan Stanley analysts said, "SARS experience shows that economic activity may be seriously disturbed in the short term, and the performance of the local market may also be poor." Morgan said. The low level of the market often occurs at the initial stage of stabilizing the incidence of virus. In terms of industry, health care and defensive stocks outperformed the market in the initial outbreak stage, while the macro related stocks (finance, real estate) and valuations with the largest correction were the largest, including IT.

Shi Jiandao suggested, "if you really want to do short-term trading, your short-term earnings will be hurt. A year later, these companies should be in the same financial position as they did six months ago.

Multiple benefits boost global market

In the past week, a number of economic data have been gratifying to further boost the performance of the stock market. In the three major U.S. stock indexes, the Dow Jones industrial average rose 3%, the NASDAQ index rose 4%, and the S & P 500 index rose 3.2%. European stock markets also performed well, Germany's DAX 30 index rose 4.1%, the French CAC 40 index rose 3.8%, and the FTSE 100 index rose 2.5%.

US economic data are generally improving. The US Supply Management Association (ISM) announced that the US manufacturing PMI in January was 50.9, higher than the previous value of 47.8 and the expected 48.5, returning to the top of the 50 line. Meanwhile, the number of ADP employment in the United States increased by 291 thousand in January, the highest since May 2015. The number of non-agricultural employment increased by 225 thousand, exceeding expectations.

The analysis shows that the US service industry has been warming in January, and the manufacturing sector is showing signs of recovery, which means that this year the economy may continue to grow moderately. Kaplan, chairman of the Dallas fed, predicts that the US economy will maintain steady growth this year, with GDP growth of about 2% to 2.25%.

European manufacturing is also recovering. In January, the PMI value of the manufacturing sector in the euro area was 47.9, a small increase, better than expected. IHS Markit chief economist Chirs Williamson said that at the beginning of 2020, there was a sign of recovery in the eurozone manufacturing sector. Confidence in the entire euro area has also generally improved, which means that the euro zone economy is likely to grow in the coming months.

Baird, chief investment strategist BruceBittles, said that some recent developments (Sino US trade negotiations, the Fed's loose monetary policy, low interest rates and moderate inflation) will continue to provide support for the economy and stock market. "We expect these factors to support investor confidence and consumer spending will not change very quickly".

Citigroup analysts predict that the global economic growth in 2020 and 2021 will reach 2.7%, of which the economic growth of the developed countries in 2020 and 2021 is expected to reach 1.5%, while the growth rate of the emerging market countries will reach 4.2% and 4.3% respectively in 2020 and 2021. The International Monetary Fund's latest world economic outlook report predicts that global economic growth will rise from 2.9% in 2019 to 3.3% in 2020.

Emerging markets deserve to be looked forward to

Although the global stock market was affected by multiple factors in 2020, there was a roller coaster impact. But looking forward to the next few months in 2020, the industry is still optimistic about the global stock market, which is most optimistic about the emerging market stock market in 2020. Many institutions believe that emerging market returns in 2020 will be higher than those in developed countries such as Europe and the United States.

Luis Oganes, managing director and head of foreign exchange, commodities and emerging markets at JP Morgan, pointed out that since the second quarter of 2019, the Central Bank of emerging markets has been lowering the policy interest rate. Due to the fact that economic growth is still below average, it is expected that they will further relax policies in the first half of 2020. In addition, inflation in emerging markets is expected to remain moderate, although core inflation has risen slightly due to partial increases in food prices.

"Although the Fed has issued a signal to ease the easing cycle, the Central Bank of emerging markets continues to cut policy interest rates in the fourth quarter of 2019 and expects that they will continue to do so in the first half of 2020, as economic growth is still below average and inflationary pressures remain moderate." Oganes added.

According to JP Morgan's forecast, the overall growth rate of emerging markets should be slightly increased to 4.2%.

"Consumers in emerging markets are still in a position to maintain their spending and will continue to be a pillar of demand growth in 2020." Michael Feroli, chief economist at JP Morgan, said (Michael Feroli).

According to Credit Suisse, the easing of monetary policy by the global central bank and the anticipation of the Asian economy will soon provide a more favorable environment for Asian stock markets to rise. Credit Suisse predicts that Asian stock markets will rebound in a cyclical manner, especially in the Asia Pacific stock market. China's stock market is expected to outperform the global emerging market composite index.

Goldman Sachs also said that emerging markets will achieve positive returns in 2020, and the growth of emerging market economies will accelerate as a result of sustained monetary easing, low oil prices, better growth environment in the United States and the euro area in the coming year, so emerging markets are expected to gain positive returns in 2020.

In its 2020 outlook report, Allianz recommended that investors consider alternative investments such as European equity, emerging market bonds and alternative investments, such as Private credit, Infrastructure debt and equity, and absolute return opportunities (Absolute-return opportunities).

In addition to the loose monetary policy, Jeffrey Kleintop, chief global investment strategist at Jiaxin, points out that the multinational government plans to introduce fiscal stimulus, that is, new tax cuts and spending plans. In 2020, Japan, Germany, India and other countries planned to increase spending to stimulate economic recovery. "If we do see that global economic growth is accelerating again, this may lead to an excellent performance of the international stock market, because they are more sensitive to the economy and are much lower in valuation."

As for the US stock, Citigroup believes that the US stock market returns in 2020 will be about 6% to 8%. It can focus on artificial intelligence and machine learning, cloud computing, network security, digital payment and financial technology.

JP Morgan also said that although the absolute value of US stocks may continue to rise, analysts at the investment bank do not believe that the excellent performance of the past two years will continue. Mislav Matejka, global equity strategist at the bank, said: "emerging market equities will benefit most from the transformation of global manufacturing, the first stage of trade truce, and the subsequent rebound in China's economic data."