The Chinese virus is just the catalyst for correction of stock indices
A study carried out by one of the institutional bodies in Israel shows that during the SARS the S&P 500 index fell by about 15%, but in the year following its end, the index actually rose by about 20%.
The US stock market fell about 1.8% last Friday and the down 3.1% from its January 17 high. Following the declines, the S&P 500 returned to its level last Christmas West.
The key catalyst for recent stock market declines is the concern over the outbreak of the Corona virus in China and its impact on economic activity in the country itself and worldwide. However, it is important to emphasize that the recent declines came after a long wave of price increases, during which the S&P 500 rose 15% in just over three months and 21% in about seven and a half months.
Other stock exchanges around the world have also suffered declines over the past two weeks as a result of the outbreak of the Corona virus. In Tel Aviv, the TA-35 index has fallen by about 5% since its peak on January 22. Another stock exchange that suffered even sharper declines is that of Hong Kong, where the Heng-sang index has fallen 9.4% since the 17th In January, given the close proximity to China and its business relationships.
On the other hand, the stock exchanges in China remained closed for the past week on the occasion of the local New Year, and therefore their current level does not yet reflect the full effect of the corona on stock prices. From January 13 to January 23, the main index of the Shanghai Stock Exchange fell by a cumulative 4.5%, but since then, the exchange closed its holiday prices and these have not yet been reopened.
Last Friday, the Shanghai and Shenzhen stock exchanges were scheduled to return to activity, but were finally closed due to the central government's decision to extend the holiday break in an attempt to mitigate expected price declines. Tomorrow, the two exchanges are set to reopen their gates, with expectations of sharply falling prices.
Meanwhile, the Chinese government has decided to extend the holiday period for the factories in China by February 10 and leave them closed, in an attempt to curb the spread of the disease. The analysts, for their part, are trying to assess the potential for damage and recovery.
For example, in recent days, the impact of recent global epidemics on the markets during the disease outbreak and in the year after it was examined.
The epidemic that has affected the market most severely in the last two decades is the viral disease that erupted in China in 2002-2003. The disease, which affects the respiratory tract, was then called Severe Acute Respiratory Syndrome, or in short, SARS. The name for this disease is a severe acute respiratory syndrome. In its outbreak, 8,096 people were infected and it resulted in the deaths of 774 people, but the SARS finally disappeared as quickly as it appeared.
A study carried out by one of the institutional bodies in Israel shows that during the period of illness, the S&P 500 index fell by about 15%, but in the year following its end, the index actually rose by about 20%. Thus, in the end, the effect of the disease on the markets turned out to be only temporary.More in Walla! NEWS More in Walla! NEWS
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