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Coronavirus And Its Impact On The Finance Industry

Businesses all over the globe are facing the brunt of a spike in the incidence of coronavirus disease. The coming of this fatal respiratory infection from the central Chinese city of Wuhan has led to devastating in the world of finance. Because the epicenter of the disease is in China, many financial enterprises and ventures that opened bases in the country or had plans to do so are badly hit. As a result of the fact that many of their workers have already been exposed to the virus coupled with the travel bans by the government, the banks are not operating.

The Impact On Finance Industry

HSBC is one of the worst-hit banks, one of the largest banks in the world, it is now busy disinfecting its offices in China and productivity has fallen to almost zero as workers can no longer go to work and few of them now have to work from home.

HSBC is not the only bank that has been crippled by the coronavirus outbreak. There are other examples and one is Credit Suisse (SIX:CSGN) which has also been so badly battered that its workers in Hong Kong can no longer work in their offices. They now have to work remotely, leading to a plunge in not just productivity but stock performance. For a few outlets of the bank that is operating, there are mandatory temperature checks, thus leading to an increase in the cost of operations.

Another major bank that has been affected too is the Swiss banking giant UBS. This bank had no other option but to tell its 2,500 workers in Hong Kong to stop working from offices, prompting panic among even experienced business brokers. Even though its principal offices in mainland China are still offering some services, its workers are prohibited from traveling unless it is important.

HSBC is being very proactive with the implementation of very stringent travel policies even though movement from Hong Kong to mainland China is allowed. As for Standard Chartered (LON:STAN), there is a restriction on every non-essential travel by staff members to its offices in Hong Kong. It did not stop there as it also banned trips to Hubei and Wuhan provinces.

Impact On Investment Managers

Another major global financial brand that is affected adversely by the coronavirus outbreak is Fidelity International. An investment manager controlling assets of almost $600 billion, it is also telling its workers in China to work from home. As for Allianz (DE:ALVG) Global Investors, the investment arm from Germany overseeing assets worth almost $600 billion, it has given out instructions to its workers to stop traveling to the areas where the virus has the greatest impact.

The global financial market is taking a big hit as the Covid-19 is spreading from China to Europe, the Middle East and North America leading to panic relating to a global pandemic. Some economists are even of the opinion that it can lead to a global recession eventually.

Comparison With The Past Disasters

The coronavirus outbreak has been compared with the SARS outbreak in 2003 which also led to a massive slump in markets especially across China. The difference here is that coronavirus is affecting the financial market on a truly global scale. The severity of coronavirus is worse than the one of SARS because of the timing. Because it broke out around the time of the Chinese Lunar New Year is most tragic.

One other reason why the impact of the virus on the global financial market is very serious is because of the place of China in the global economy. China now represents over 15% of global GDP so whatever happens, the Chinese market will have a ripple effect across the globe.

This viral outbreak triggered the swiftest drop in the stock market since the Great Depression of 1933. Wall Street recorded a slump that was the lowest since 2016 which amounted to a loss of well over $5 trillion on the global market in just a week in the last week of February 2020. The same week saw the worst one-day fall ever for Wall Street as the Dow Jones Industrial Average slumped by 1,190 points.

As the Financial Times Stock Exchange 100 plunged by 823 points in less than a week which translated to a loss of GBP206billion of the top 100 enterprises to close at 6,580.61 points. Brands like EasyJet and IAG (LON:ICAG) (owner of British Airways) were some of the worst-hit while Carnival (NYSE:CCL), operator of the Diamond Princess cruise ship which was hit by the virus lost 20% of its stock market.

Closing Remarks:

With Corona Virus’s continuous spread to other countries, it’s a chapter far from being closed. And until there is proper solution available, the financial markets will continue to get hit, especially the Stock Markets.

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