In absolute terms, the US has lost $4.25 trillion in market cap | Illustration: Binay Sinha
While the impact of the coronavirus
outbreak on the global economy will play out over the next few quarters, the equity markets
have already seen an erosion of $8 trillion in market value. Most global stocks have tumbled as the epidemic has triggered a flight to safety among investors. While riskier assets have dropped, safe-haven investments, such as gold and developed world bonds, have rallied. In absolute terms, the US has lost $4.25 trillion in market cap — from $35.99 trillion to $31.74 trillion. In comparison, China, the epicentre of the outbreak, has lost only $400 billion. Market players said the steps taken by the Chinese government have mitigated the fall in its markets.
The Indian markets
have lost nearly $180 billion in market value. “If the epidemic is prolonged, it will have a big impact on global economic activity. If it is contained shortly, the risk-reward is very attractive after the latest correction,” says Gautam Chhaochharia, head of India research, UBS.