The Wuhan coronavirus panic has smashed the Korean stock market. Between Jan 23 and Jan 31, over 5 business days excluding the Lunar New Year holidays, KOSPI dropped 148.24 points to 2119.01 (-6.54%) and KOSDAQ dropped 45.77 points to 642.48 (-6.65%).
Observing the market tremble, I couldn’t help but consider it irrational, or at least overreacting.
Yes, there must be some negative impact on economy and industries, but would it deteriorate EVERY industry’s or firm’s FUNDAMENTALS?
Even if so, for how long? A WHOLE YEAR?
I assume that the impact on businesses’ fundamentals, if there exists any, would be limited to the first quarter only and that most of the firms wouldn’t be much concerned with the issue except for a few manufacture-based global firms such as Hyundai Motors, whose considerable number of factories are located in China.
No one knows exactly when the panic of the Wuhan coronavirus to be disposed of. But history teaches us that hardly has a panic come alone; we must gauge opportunities cloaked in the panic which are highly likely to provide remarkable unexpected returns, especially if the panic is out of sentiments than fundamentals.
It’s time to check whether the moral is still valid: “Buy the fear and sell the greed.”