economic recovery

Apart from ComfortDelGro's weaker earnings in 1QFY2020 ended March, DBS analyst Andy Sim notes that the company is slated to be excluded from the MSCI Singapore Index from May 29, which could put significant pressure on the counter’s share price.

Any resurgence in the number of infections will only worsen the [global economy]. The recent flare up of cases and re-imposition of restrictions in South Korea and parts of China are worrisome,” IHS Markit’s economists.

What was once perhaps unthinkable must now be included in our immediate investment and business calculations. China is not sitting back in the face of this bully behaviour, so the investment horizon is still wide.

While China will arguably lead the pack with a recovery by 3Q2020, economist Deyi Tan says export-oriented economies such as Singapore, Thailand and Malaysia are likely to take until 1Q2021 to recover.

Historically, analysts have never been very good at revising down earnings estimates, especially during crises. Worse, the current health crisis has no precedence for guidance.

“The markets hate uncertainty, and until a medication or vaccine is developed to fight the coronavirus outbreak, Covid-19 will be an overhang on the economy,” says the KGI team. “In a nutshell, we are taking a firm view to buy in April and not look back."

In any case, the key point is that the steps needed to restart the economy are the same as those needed to slow the transmission of the virus.

Nestled within this flow of news are other sets of statistical information that point the way to investment opportunities outside of — but directly related to — China.

“There is a complex relationship between the path of the virus, the effectiveness of virus containment and economic support policies, and the behaviour of the private sector,” JPMorgan Chase & Co economists said in a report to clients.