Question

Financial markets-The current Caronavirus outbreak is said to be affecting the global financial market. Using two countries as examples, briefly explain the impact the outbreak of the virus is having on the financial markets of the two countries selected.  

Answer 1

The coronavirus that is now spreading through China and beyond its borders has shaken financial markets. Experience with virus outbreaks in the past shows that markets frequently bounce back quickly The economic impact on China depends on the Chinese government's ability to contain the virus and its policy decisions to minimize its impact Even if the outbreak of the virus turns out to be similar to SARS, its global economic consequences are likely to be greater than in 2002/2003, because China has a much greater share of the outbreak. In addition, the economies are much more interconnected than 17 years ago

While the current crisis may make it even more difficult for China to live up to its recent agreement to curb US imports of goods and services by USD 200 billion of goods over the next two years, we do not anticipate an additional negative impact on US-China trade relations, as Phase One specifically addresses exemptions in the event of a natural disaster

No confirmed cases of the virus have yet been found in the Netherlands. The effect of the outbreak on Dutch companies will be mainly indirect, through global economic growth and sentiment. The Netherlands is sensitive to global trade (which will get hurt), as a relatively small open economy. Bearing in mind the role of the Netherlands as a gateway to Europe for China, the transport sector could suffer in particular. But other businesses in industries that are exposed to cities that have been shut down, including Wuhan, too.

For example, the Netherlands (according to the Netherlands Enterprise Agency) imports from Wuhan textile, mobile phones and medical equipment and exports marine equipment, machinery and chemicals into the city. It is likely that Dutch companies which import or supply these goods will be hit.

Source: Economic Times