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In China, the number of new cases is falling since early February, but the problem is now the growth in the number of cases outside China. In Europe, northern Italy is beginning to be seriously affected by the spread of the coronavirus. As the economic impact of the coronavirus increases, there will also be more monetary and fiscal support from governments.
On the financial markets, the corona outbreak is mainly approached from the demand side of the economy: oil prices and interest rates are falling.
Below, I will discuss ten consequences of the coronavirus in Holland that are relevant for stock buying or also called aandelen kopen in The Netherlands:
1. It is not the corona virus, but the measures taken to curb it that are the main culprit for the economy.
The base scenario for the global economy is still a V-shaped recovery: i.e. a limited slowdown, followed by growth recovery.
- However, the impact of the coronavirus is greater than the outbreak of the SARS epidemic in 2003. The effects are now comparable to the triple Tohoku disaster that hit Japan in 2011: an earthquake, tsunami and the nuclear meltdown in Fukushima.
- Despite the nuclear contamination, the destruction of infrastructure and the major impact on various production chains, a V-shaped recovery also followed in Japan, with a large part of the loss quickly made good.
2. The greater the impact on the world economy, the stronger the monetary and fiscal support of governments
According to the International Monetary Fund (IMF), the impact of the coronavirus on global growth is now 0.1 percent. The greater the negative economic impact of the corona outbreak, the more monetary and fiscal compensation will be provided. This is in addition to the broad policy that has already been implemented.At the same time, for the first time in history, quantitative easing is taking place in the United States, the euro zone, Japan and China. On top of this, the money supply is also wide open from a fiscal point of view for big brands such as Apple .
3. China is consuming less energy by taking measures to contain the coronavirus
In China, coal-fired power plants are operating at the lowest level in the last four years. Nitrogen pollution in China has decreased by 36 percent, the number of domestic flights even by 70 percent.China’s CO2 emissions have suddenly decreased by 25 percent. The result is a sharp drop in the price of oil. Western consumers benefit from this in the form of lower fuel prices. Furthermore, the virus is depressing interest rates, as a result of which the 30-year mortgage rate in the US has fallen to its lowest level since the summer of 2016. This is good for the US housing market.
4. With the new cases outside China, the corona outbreak is starting to look like a pandemic.
Especially in countries with a poor medical infrastructure, the virus can spread faster. The moment the World Health Organization (WHO) declares a pandemic, this can cause panic.
At Sars, the low point of the scholarships fell on the day that the WHO declared a pandemic. Even then, the number of new cases had been on its way for a month.