SINGAPORE (Mar 13): Covid-19’s impact has been brutal and sudden. The longest bull market has now suffered the fastest correction since the Great Depression.
However, investors in Singapore should take solace from a tragedy that occurred a hundred years ago. The Spanish Flu Pandemic of 1918 killed more people than World War 1. Fifty million people died, according to some accounts, which was about 3% of the world’s population then. It spread like wildfire infecting one in four humans — a total of 500 million people.
British Malaya, which included Singapore, suffered immensely. The territory was a vital source of rubber and tin for the British Empire. It was closely integrated commercially and militarily to the rest of the world.
About 1% of British Malaya’s population of 3.6 million perished, according to a paper by Dr Kai Khiun Liew of Nanyang Technological University. However, the death rate in other parts of the world was much worse. It was more than 4% in some parts of India, where the flu killed 7 million people.
Back then, the virus seemed to have entered the territory through the port of Singapore. Travellers used to dock from as far afield as Vladivostok (in today’s Russia), which was heavily afflicted.
Those who are panicking today should consider the following. Health standards are infinitely better nowadays. Singaporeans now have access to antibiotics and world-class healthcare facilities. In 1918, the hospitals were unable to cope. Infected patients had to sleep on the corridors.
Medical staff themselves were infected, as this was long before health warnings. Thousands were infected by gathering in public places. On Nov 13, massive crowds gathered to celebrate the end of the war on Nov 11. The warnings to avoid large gatherings were completely ineffective.
Many cinema owners and mall operators in Singapore are now complaining bitterly about the poor footfall due to Covid-19. This is trivial compared to the devastation that the Spanish Flu brought: from September 1918 to the end of the year, up to 50 people were dying every day in Singapore. The situation was worse elsewhere in Malaya. But business continued unabated. Singapore traded heavily with the rest of the world. It was the epicentre of the world’s rubber trade, because the London auction had closed due to World War 1. Almost one-third of the world’s rubber was exported from Singapore, compared to less than 5% in 1914. Singapore was directly exporting Malayan rubber to the US, bypassing London.
The year of such death was a bountiful period for commerce.
At the end of the way in 1918, people flocked to Paris Cinema on Victoria Street to watch silent newsreels of the victory. Talking movies were some years in the future.
Entertainment was undiminished elsewhere. In London, the Palladium Theatre in London had a germ-killing spray to assuage fear. This theatre continues to survive and thrive up till today.
The stock markets rose in spite of the pandemic. After the US entered the war in 1917, economic activities picked up. It became a workshop of the world. When the war ended at the end of 1918, the demilitarisation of soldiers back to civilian life caused a brief economic slowdown. In addition, the US suffered heavy casualties due to the flu, but the impact on commerce was comparatively muted.
In 1918, the stock market’s return was higher than the long-term average: the Dow Jones Industrial Average (Dow) rose 11% that year, including reinvested dividends.
The Dow components then included some counters that are still thriving — General Electric, US Steel and Western Union. Other companies such as Utah Copper and Westinghouse have merged into Chevron Corp and Rio Tinto.
The world is much more integrated today. Disease can spread much quicker in the jet age. Population density is maybe fourfold higher today. We are much more vulnerable to fear and panic due to instant communication; the Spanish Flu occurred long before the Twitter age.
Nonetheless, stock markets and commerce rose in the face of death a century ago. The pall of gloom may lift sooner than the doomsayers expect. The savage correction that we suffered this past week may be overdone.
Nirgunan Tiruchelvam is head of consumer sector equity at Tellimer (Exotix Capital)
