The odds of a pandemic have risen to 40 per cent from 20 per cent earlier and this is going to have a huge bearing on not just growth in China but across the globe. What is your take?
We have already seen the impact coronavirus has on China. A significant portion of February’s industrial production, as well as retail sales, have essentially collapsed. We do know now that the disease has spread outside of Wuhan. The spread of the disease has declined but we still have not seen the peak of it. Our own epidemiological model suggests that maybe the peak is going to be somewhere around 110-120 people infected and probably in the first week of March. The bigger problem right now is not China per se but where it spreads starting from Korea. Last week the Korean numbers surprised the market. It later spread to Italy and then cases as far flung as Brazil too started to crop up. No one really knows where and how fast that is going to spread and that is where the fear in the market has been.
Those who have kept their nerves and not panicked in moments like these have emerged as winners. Do you think the average investor should not bother about what the screen and the television ticker is telling you?
Yes and no. If you look at past events like these, for instance when SARS broke out in 2003, China was just 2 per cent of the global trade, today it is about 17 per cent. China contributed marginally to global growth then