Have Stock Markets Overreacted to Coronavirus?

The Week: Morningstar columnist Rodney Hobson says shares in luxury goods and mining firms have fallen too far in response to the epidemic

Rodney Hobson 31 January, 2020 | 9:46AM

Stock market chart

Investors who suffer a sharp fall in the value of one of more of their shareholdings sometimes try to avoid facing reality by using phrases such as “I caught a cold”. It’s always best to face up to what has happened, however unpleasant it may be. That way you take responsibility for your mistakes and learn valuable lessons.

This week, however, stock markets around the globe really did catch a virus – the coronavirus to be precise. Fears that the epidemic in several Chinese cities would spread across the world’s second largest economy and subsequently into other countries. The two main indices in the US fell 1.6% in one day; the FTSE 100 lost 2.3%; Germany’s Dax and France’s CAC 40 slumped 2.7%.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Pendragon PLC8.30 GBX-0.36
Saga PLC15.29 GBX-0.84

About Author

Rodney Hobson

Rodney Hobson  is a columnist for Morningstar.co.uk and author of several investing books, including The Dividend Investor and How to Build a Share Portfolio.

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