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Originally Posted by Samurai Already dropped another 3500 points by 10:10am today
Society as we know may break down, if humans can't overcome this virus. |
Sorry but this is abject fear mongering (no personal offense meant to you). COVID ultimately has a mortality rate of 2% far lower than even diseases like the Flu in cold countries. Break this down into age groups and till 70 it has next to no mortality rate.
Society as we know it has survived pandemics like the Influenza pandemic of 1918 which killed 10's of millions (close to 3-5% of the total pop) and had much higher mortality rates ESP in the age group 20-60 (some countries reported upto 90% mortality rates in this age group which is only slightly less than viruses like Ebola). Guess what happened a year later? A deadlier second wave and then it simply died out (pun unintended). Now guess what GDP growth rate of the US (one of the worst affected) was just a year after this second wave? Close to 7% and it kept climbing till the great depression hit.
Society as we know it is very advanced and we are taking precautions but this won't sustain as...business always finds a way. People are not going to be stuck indoors for months on end (assuming the virus does not die out by then) doing nothign.
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Originally Posted by GTO The Coronavirus is going to give a body-blow to the economy, not just in India, but globally. |
Medium run, I think this will definitely be a net benefit to India as already many companies are seeing the problems with centralising their production in China and there already was a movement afoot to diversify production centres and it will accelerate now.
Chinese companies themselves are leading the charge here btw. Look at how FDI flows have drastically improved here.
It averaged $ 450 mn / year in 2014-15,
https://economictimes.indiatimes.com...w/52909753.cms
It has shot up to $ 2bn (a 5 fold increase) by 2017.
https://www.forbes.com/sites/suparna.../#7adfb1ca1dac
We aren't even seeing the tip of the possible Chinese iceberg, from electronics to automobiles...
Just automobiles alone seem to be possibly a $ 5bn investment.
https://www.chinadaily.com.cn/a/2019...e35577b93.html https://www.livemint.com/auto-news/c...837264752.html
Greatwall is lining up a $ 1bn greenfield investment already.
Ditto electronics. So in my limited opinion, once the dust settles on the COVID19 in a few months, India would actually become stronger....but the caveat is that the govt has to roll out the red carpet for FDI shifting from China (which they have done by giving tax waivers in the last budget for manufacturing)
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Originally Posted by Nissan1180 Whatever gains were made in the last few years have been erased. A lot of people who started investing in mutual funds when savings bank account interest rates were reduced. This crash is going to erode whatever hopes were there for the economy to revive this year. Coronavirus triggered a sell off, but the fundamentals have been weak for a long time. Not 1 consumption driven company did well in the last couple of quarters. The fake euphoria surrounding the Indian econony has ended and a lot of pain is yet to come. |
The Indian economy has been growing in the top 5 of all major economies for close to 2 decades now. There is nothing 'fake' about it.
I seriously don't understand why a normal phase in the naturally forming economic cycle is being projected as some sort of eternal death of the Indian economy.
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Originally Posted by Samurai I am curious. What was the last time such a calamity hit the stock market, where businesses are losing transactions because of social distancing at every level?
What are the models they are relying on to analyze this crash? |
If you look at the DOW, with a 8% fall in one day, it looks cataclysmic but it is not even in the top 10 by % changes. The greatest single day fall was black Monday of 1987.
Though I don't think there has been any modern global pandemic to rival this one, so not sure if money managers even have models for this. Not my area of expertise and just pure guess work, maybe some investment banker BHP'ian can shed light on this.