Some thoughts on CoronaVirus

I think 2020 should be a good year for the stock market. The CoronaVirus may provide me an opportunity to enter.

Some stocks that have been hit

  1. Airlines related  – eg. SIA, Cathay Pacific, SATS
  2. Hotel, Tourism related – Far East HT, Genting
  3. Retail Reits – CapitaMall Tr, Mapletree NAC Tr, Sasseur Reit
  4. And many companies with businesses in China such as EC World, Capitaland, Wilma, HKLand.

Stocks that interest me

Although the above stocks look interesting, at the moment, I lean towards stocks that dropped and have little to do with the Coronavirus. Examples are chinese tech stocks such as :

  1. Ping An
  2. Tencent
  3. Baidu
  4. Baba

What happened in 2003 during SARS?

This is the weekly chart of STI in 2003.

  • STI, Shanghai Composite, and Hang Seng, indices each dropped about 18% in 2003 because of SARS. Currently, HSI has fallen about 7% and STI has fallen 3%, while Shanghai is still on CNY holiday.
  • Note that the recovery started in end April.
  • STI as well as regional indices went on a tear for the next 1 year after SARS.

When I plan to start buying?

For starters, there must be a week where rate of increase of number deaths and number of infected starts decreasing.

Somewhere in March to April may be a good time to enter, not just because of the above chart, but also from watching a video where Dr Paul Tambah gave a nice hint:

Watch, especially at 3.38min.

Dr Paul Tambah:” I am pretty confidant that the virus will disappear in May even if the measures are not that effective. And the reason I say this is that when the warm weather kicks in, a lot of these virus disappear in temperate countries, like SARS disappeared at the end of May when the warm weather hit Beijing. The flu disappears every year in April in temperate countries like Europe, North America and Japan.

Use weekly candle to trigger entry

I plan to wait till there is week where the week’s closing price of indices is higher than opening price to trigger the first entry. This will not catch the very low, but it will help prevent catching a falling knife.

I hope this blog post help you to make sense of the current situation. Till next time, be safe.

  • I'm a remisier with Maybank Kim Eng, and as a bonds and REITs investor myself, I guide my clients to build resilient bonds and REITs portfolios. If you like to be guided, please open a trading account to become my client; It's free!