Wuhan virus: Why investors are not panicking

Unlike the anti-PAP cybernuts who rushed to hoard rice and instant noodles investors are not panicking Because

We estimate that even in a scenario where the rate of new infections did not peak until the second quarter, the negative hit to global economic growth would be about 0.3 percentage points. That means the expansion would still be 3.1 per cent — in line with last year’s pace.

Goldman Sachs Japan vice chair talking about the global economy

Current investor sentiment seem to suggest an economic recovery from 2018 lows remains on track, albeit with a delay.

JPMorgan’s Asia equity strategy team notes the prevalence of three types of investors at the moment:

“The largest group of investors have chosen to ride out the whole episode with an assumption that market reactions to the developments would be transitory and difficult to time. Much of this camp has recently been adding to existing holdings as they have corrected.”

It says, one gauge of this, which also dovetails with the Nasdaq 100 up 9.4% this year to a record high, is how the China A-shares tech sector is the best performing sector, says JPM.

A more KS group of investors believes “the situation is about to significantly deteriorate, calling cycle views into question”, notes JPM.

The bank’s strategists say “there are risks from unexpected supply disruptions (through bottleneck inputs or processes) or a resurgence of new cases as factories reopen or the virus mutates”. That scenario entails a drop of 6% in the MSCI Asia Share index excluding Japan, and further pain should the cycle falter from here.

The final group includes the buyers of the dip or what JPM term “a similar minority of investors are tactically raising risk exposure” and anticipating a lot more easing from China that offsets any damage to consumer sentiment.

JPM points out:

“In a somewhat cyclical argument, it is important for the market to hold up as, contrary to popular belief, we find price action shaping narratives and sentiment as much as (if not more than) the other way around.”

In simple English it’s saying “This view requires a degree of optimism”.

 

Cynical Investor

Cynical Investor blogs at Thoughts of a Cynical Investor

 

 

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22 Responses to “Wuhan virus: Why investors are not panicking”

  • oxygen:

    MORON INVESTOR farting gases.

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  • pap PA paid IB ci piece shits:

    hoard rice means anti pap?

    what a piece of shitty brain.

    those who hoard rice are the 70% sheep brainless supporters of pap.

    only the 30% OPPO, the smarter, richer, more savvy, know what to do. we the savvy, richer, smarter, 30% OPPO, don’t lift a finger. we just type Reedmart and it delivers. Even 840 kg per package Redmart delivers. and delivery is free.

    pity the 70% sheep who believes what shitty pap PA paid IB says.

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  • REGIME CHANGE is the solution:

    Investors are optimistic. The Wuhan virus might help to finally bury PAP with LKY at the coming GE. It showed again its stupidity and incompetence – “Do not wear a mask if you are not sick.”

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  • opposition dude:

    Slowly slowly, we take each day as it comes. If there is evidence pointing to an upsurge of cases in Singapore then other preventive measures will hopefully be in place.

    And it’s funny how the anti PAP types are hoarders ha ha ha. Uncle Cynical is always good for a laugh when he writes nonsense!

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  • Dear Cynical Investor:

    I think it is more of the PAP supporters who rush to buy and hoard masks, rice, instant noddles, and even toilet paper.
    Knowing my family members who are pro or diehard PAP supporters, they are kiasi, kiasu and kia cheng hu type.
    They choose to believe or not to believe which PAP propaganda is.
    Their priority is their own well being, nothing wrong about that.
    Our lives have improved in the past few decades at least financially.
    And they will continue to vote for PAP once this Covid blows over in summer in the Northern Hemisphere.
    This is Singaporeans mentality, like any other person in the US, China, generally speaking.

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  • Hi CI:

    If you are trying to provoke anti PAP cybernuts to read and reply to your article to score high readership, I think you may be able to achieve somehow a bit.
    If you want to persuade people to read and invest, buy or sell shares, I am not too sure.
    I usually do not dignify such article written by self serving writers.

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  • will go up later:

    //Current investor sentiment seem to suggest an economic recovery from 2018 lows remains on track, albeit with a delay.//

    aiyoh ? from low, of course will go up later (not whether but when) ? if not 2 mths down the road, then one year later lor ? if not one year, then two years lor ? that is why forecast keeps on being revised regularly with all the “right” cut-n-past financial language and fanciful jargons to dress it up as though it has any “truth” ? long term investment horizon for honest mistakes hor, but plenty of short term rent-seeking and direct / indirect tax to plan and work for the future hor ??

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  • oxygen:

    @ Hi CI

    INVESTORS NOT PANICKING? I see gold price up overnight but Aussie gold shares falling further.

    Gold and gold shares are supposedly to be ‘SAFE HAVENS”, BUT PRODUCERS OF GOLD DOWN UNDER FOUND NO FAVORS WITH INVESTORS.

    SO-CALLED SAFE HAVENS ARE NO LONGER SAFE. Look at Newcrest Mining, the biggest listed OZ gold miner – NCM.ax on the chart now.

    Hi CI: If you want to persuade people to read and invest, buy or sell shares, I am not too sure.
    I usually do not dignify such article written by self serving writers.

    That is why I slapped this fart head.

    oxygen: MORON INVESTOR farting gases.

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  • The Fearful Piggies:

    Of the 70% papiggies voters, at least 50% live their whole lives in fear.
    This is a known fact; the other 20% are papig-cronies.
    Thanks to 50-year fear indoctrination by papig.
    Very dead old [email protected]$t wanted Lau-Goh to read ‘The Prince’.
    ”It is better to be feared than to be loved”…best quote from The Prince
    The hoarders are CONFORMED papiggies voters.

    pap PA paid IB ci piece shits:
    hoard rice means anti pap?

    what a piece of shitty brain.

    those who hoard rice are the 70% sheep brainless supporters of pap.

    only the 30% OPPO, the smarter, richer, more savvy, know what to do. we the savvy, richer, smarter, 30% OPPO, don’t lift a finger. we just type Reedmart and it delivers. Even 840 kg per package Redmart delivers. and delivery is free.

    pity the 70% sheep who believes what shitty pap PA paid IB says.

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  • The Fearful Piggies:

    Of the 70% papiggies voters, at least 50% live their whole lives in fear.
    This is a known fact; the other 20% are papig-cronies.
    Thanks to 50-year fear indoctrination by papig.
    Very dead old [email protected]$t wanted Lau-Goh to read ‘The Prince’.
    ”It is better to be feared than to be loved”…best quote from The Prince
    The hoarders are CONFORMED papiggies voters.

    pap PA paid IB ci piece shits:
    hoard rice means anti pap?

    what a piece of shitty brain.

    those who hoard rice are the 70% sheep brainless supporters of pap.

    only the 30% OPPO, the smarter, richer, more savvy, know what to do. we the savvy, richer, smarter, 30% OPPO, don’t lift a finger. we just type Reedmart and it delivers. Even 840 kg per package Redmart delivers. and delivery is free.

    pity the 70% sheep who believes what shitty pap PA paid IB says.

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  • Sojoürner of Truth:

    oxygen:
    @ Hi CI

    INVESTORS NOT PANICKING? I see gold price up overnight but Aussie gold shares falling further.
    Gold and gold shares are supposedly to be ‘SAFE HAVENS”, BUT PRODUCERS OF GOLD DOWN UNDER FOUND NO FAVORS WITH INVESTORS.
    SO-CALLED SAFE HAVENS ARE NO LONGER SAFE. Look at Newcrest Mining, the biggest listed OZ gold miner – NCM.ax on the chart now.

    That is why I slapped this fart head.

    @ oxygen

    That’s the mix of not only the ‘long-term step (in Treasures)’ and ‘putting capital somewhere in a safe haven’, but some of the evidence has been poor, and this is also a bet that long-lasting yields can go down regardless of how the virus plays out. It’s possible that over the next month, there will be some serious moves back and forth as we find out what’s going on with the virus.

    The spread of the virus has uncovered an obvious disparity between financial markets and research. Health experts don’t know how far the epidemic is going to spread and how serious the situation is going to get, but markets are falling together as if investors expect nothing more than a small blow to the global economy.

    They see gains from rising companies that have had an absolutely fantastic run and transfer into the investment exchange of the US currency, treasury and dividend-paying industries such as REITs, healthcare and utilities. Growth stocks are in a cloud, and the longer this goes on, the more the bubble can inflate.

    I’m not taking a big view of ‘buy the market’ or ‘sell the market.’ The market will be somewhat volatile for the next two months, maybe the next three, so we’re more likely to be long volatility out two months. I expect a lot of volatility each day if those numbers get posted. It will take a while for the markets to digest it.

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  • TruBlu:

    think this people got to chnage name to GOLDmen SEX?

    Or,maybe GOLDmen SACK!

    A Giant Octopus it is!when they buy,they tell you SELL,SELL,SELL!
    When they SELL,they tell BUY,BUY ,BUY TILL YOU DIE lor!

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  • TruBlu:

    So,many scientific ‘brains’ sneered and passed snide remarks at some ‘ancient’ folk-lore about ECLIPSE OF THE SUN…
    looks like there is some truth in those simple observations of our ancestors using only bare eyes with no HIGH-TECH equipment$$$???

    we must be humble and learn from OLD WISDOM.

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  • TruBlu:

    BOTH gloaba-LIE-$ation and ‘GOBBLE-lisation’ are no good for the world.

    the RICH AND THE GREEDY NEED TO MAKE AMENDS AND ASK THE HEAVENS FOR FORGIVENESS.

    SHARE THE FRUITS OF HUMAN LABOUR AND DO NOT HOARD,what is a BILLION TO A HOLDING OF $100 BILLION one oredy has?

    let WILD-LIFE live their won lives,why disturb them at all?

    WHY NOT THOSE WHO ARE SO ‘adventurous’ in food,EAT THEIR OWN SHIT???
    That would be very ‘extra-ordinary’ and ‘eye-catching’???

    TIME FOR THE RICH N GREEDY N PROUD TO REFLECT.

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  • bystander:

    Oh we are smarter than the PM Lee and his moron 4G Ministers, we stock up on food, meds and masks early December 2019 after hearing about this mysterious virus breaking out in Wuhan.
    Our family have better 20/20 vision than our stupid, complacent Govt. Remember PM Lee was so complacent he chose to go away for holiday, then went to Davao to lecture Hongkong on how to end the protests, while his own backyard was cultivating the new virus among the people here.

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  • oxygen:

    @ Sojoürner of Truth:

    Gold price was up last night.

    https://goldprice.org/

    And see what happened to the share price of some of the biggest North American gold stocks.

    https://www.kitco.com/stocks/hui.html

    IT IS A CONTINUATION OF EXACTLY THE SAME PATTERN I SAW IN AUSTRALIA YESTERDAY.

    oxygen: INVESTORS NOT PANICKING? I see gold price up overnight but Aussie gold shares falling further.

    Gold and gold shares are supposedly to be ‘SAFE HAVENS”, BUT PRODUCERS OF GOLD DOWN UNDER FOUND NO FAVORS WITH INVESTORS.

    SO-CALLED SAFE HAVENS ARE NO LONGER SAFE. Look at Newcrest Mining, the biggest listed OZ gold miner – NCM.ax on the chart now.

    exactly – gold price up but institutions selling gold stocks.

    WHERE IS THE “SAFE HAVEN”?

    And investors “not panicking”

    LIKE I SAID AT THE BEGINNING OF THIS THREAD.

    oxygen: MORON INVESTOR farting gases.

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  • oxygen:

    @ Sojoürner of Truth:

    THE FOREGOING tells me institutions are SELLING GOLD SHARES in AUSTRALIA AND NORTH AMERICA at least and it is silently “panicking” without waking up the rest.

    But you are right of these.

    Sojoürner of Truth: some of the evidence has been poor, and this is also a bet that long-lasting yields can go down regardless of how the virus plays out. It’s possible that over the next month, there will be some serious moves back and forth as we find out what’s going on with the virus.

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  • Sojoürner of Truth:

    oxygen: THE FOREGOING tells me institutions are SELLING GOLD SHARES in AUSTRALIA AND NORTH AMERICA at least and it is silently “panicking” without waking up the rest.

    @ oxygen
    The gold standard by all means. The irony is that while it appears the economy is growing, akin to the analogy of “boiling a frog,”. We are stuck in this alternate reality where company profits are steadily falling but due to low interest rates and momentum trading on Wall Street (justified by the self-serving mechanism called price-earnings multiple expansion)the market continues to rise and we find ourselves in an addictive 401k Ponzi bonanza. Where is the end game?

    So… Big surprise that Trump will do everything and anything to remain in power including inflating the stock market with as much “free” money as he can manage to get printed. If he can just keep things pumped up until after the election he would care little if at all for the consequences.

    We are going to regret these artificially low rates when the next downturn begins. The next recession is going to make the last one look mild.

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  • oxygen:

    @ Sojoürner of Truth:

    MY MESSAGE HERE is that financial markets downturn begins with a ripple, then the tide before the tsunami rolls in to drown all greed and stupidity.

    Sojoürner of Truth: We are going to regret these artificially low rates when the next downturn begins. The next recession is going to make the last one look mild.

    THE RIPPLE IN THE GOLD MARKET IS TELLING.

    FASCINATING THAT 12 HOURS AFTER I WROTE MY THOUGHTS/OBSERVATIONS ABOVE, another gold market observer across the ocean in North America also shared the same thoughts of OPENING THOUGHTS in mining.com.

    Adam Hamilton:The gold miners’ stocks are still stalled, mostly grinding sideways despite higher prevailing gold prices.

    AND

    Adam Hamilton:That’s despite gold continuing to climb to major new secular highs of its own in early and late January. Both were fueled by geopolitics, first a flaring US-Iran conflict and later China’s scary coronavirus outbreak. But the major gold stocks failed to follow the metal higher which dominates their profits. That disconnect is really unusual.

    Gold stocks still stalled

    https://www.mining.com/web/gold-stocks-still-stalled/

    The disconnect is OMINIOUS WARNING of market detachment from reality as you also pointed out.

    The PANIC AND PANICKING IS ON-GOING, SILENT RIPPLE.

    If gold shares are not safe haven in this SILENTLY ORCHESTRATED SELLING in the face of rising gold price, WHAT IS SAFE INVESTMENT LEFT in the looming coronavirus ravage, I am left to bewilder.

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  • Trublu:

    It is simple.
    When cannibal$ have killed the *victims*,they will eventually KILL themselve$$!

    Greed is extreme these days.
    This is NO GOOD for the world at large.

    Both PRC N USA are at fault.
    Unless the COVID is stopped soon,rich busine$$men n bankster$ can forget about milking more $$$ n increasing their share-holders’ value???

    The RICH N POWERFUL are responsible for the global economic SLOW-DOWN.

    WHEN ONE SHARES,ONE MULTIPLIES.
    WHEN ONE HOARDS,ONE REDUCES.
    GLOBALISATION HAS BEEN A BIG LIE.

    ONE BELT,ONE ROAD looks like getting stalled.
    No man,however great n proud, can play God.
    Bad actions brings about bad Karma.

    Greed is defintely no good.

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  • Trublu:

    My humble take,GOLD may be bought up in the short term but if global economy continues to be retarded,EVEN GOLD PRICE WILL DROP.

    SAFE HAVEN OR NOT WILL NOT MATTER OVER A PROLONGED GLOOM.

    PRAY N HOPE COVID DISSIPATES ITSELF SOMEHOW OR SOME KIND OF VACCINE IS FOUND.
    Else,more harm for the already stricken.

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  • Sojoürner of Truth:

    oxygen: If gold shares are not safe haven in this SILENTLY ORCHESTRATED SELLING in the face of rising gold price, WHAT IS SAFE INVESTMENT LEFT in the looming coronavirus ravage, I am left to bewilder.

    Trublu: My humble take,GOLD may be bought up in the short term but if global economy continues to be retarded,EVEN GOLD PRICE WILL DROP.

    SAFE HAVEN OR NOT WILL NOT MATTER OVER A PROLONGED GLOOM.

    @ oxygen, Trublu

    Cynical Investor’s piece of ‘received wisdom’ is inordinately resistant to reality. But strong returns on stocks did not stop gold from continuing to rally. And the returns on long term government bonds also soared because bond prices go up when interest rates decline. Gold rallied despite high returns on stocks and bonds because it was believed by a few rich plutocrats that inflation would become a problem when the Fed began pumping up the monetary base.

    Gold is a scarce asset meaning it will respond to small group of determined speculators, such as demand from a few very rich cranks. The gold rally that ended in 2011 was in fact a mini asset bubble largely driven by goldbug speculation.

    Two unrelated points: (a) Warren Buffet wrote about how if all the gold in the world was melted down, it would fit in a solid cube in one football stadium; that it has little intrinsic worth, and (b) I will let very smart people evaluate whether current economic theory published in top econ journals have basis in reality.

    I suspect Warren Buffet is totally right, and very smart people who assume economics-reality connection are totally wrong.

    Irrational exuberance right now leading to stock market highs while the underlying fundamentals of the economy are very shaky: personal and corporate debt at all-time or near highs; full employment while wages remain stagnant; personal savings at all-time lows; big corporate tax cuts spent on stock buy-backs that have inflated stock prices; artificially suppressed interest rates that have done nothing but stimulate more borrowing instead of actual investments; uncontrolled inflation on disease care spending; and Trump’s tariffs that are an effective tax on consumers and business.

    All it will take for this to crumble is the long-awaited, necessary “correction” in the stock markets that chaos, delusion and lack of coherent policy inevitably bring.

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