John Rathnam, CFA

Rathnam Capital

8000 Towers Crescent Drive, Suite 1350

Vienna, VA  22182

703.245.6662 /

Coronavirus Affect On The Markets, Economies & Commerce – Global Commerce

Global trade has been hindered by U.S. China trade disputes for the past two years, but the virus outbreak has nearly stalled all trade between China and its trading partners.

Production delays resulting from the virus are expected to affect company earnings across a host of various industries. The disruption of established supply chains has created havoc for companies trying to maintain inventory levels to meet demand.

Economic growth estimates were revised downward by the World Health Organization, World Bank, and International Monetary Fund. The concern is how deeply the spread of the outbreak will affect local economies worldwide.

Oil markets have reacted negatively as the world’s largest importer of oil, China, is now expected to reduce consumption. Other commodities related to manufacturing and production also fell as demand pulled back and factories shut down across China.

Technology products and the travel industry have thus far been impacted the most by the virus spread. Nearly every technology-related product has components sourced out of China, or manufactured entirely within the country. The inability for companies to cease production and not be able to meet demand may eventually translate into reduced revenue and earnings.

Several analysts have already slashed earnings estimates for many companies in various sectors, anticipating an extended period of time before companies catch up on inventory and demand.

Some international and U.S. companies are considering a transition of a portion of their manufacturing and operations to other countries. Emerging market economies are expected to benefit from companies leaving China for manufacturing and production locations elsewhere.

Sources: WHO, World Bank, IMF


Past Pandemics & What Came Of Them – Health Overview

Over the decades, pandemics have evolved and lasted for varying periods of time, yet always culminating with the containment and/or elimination of a virus. Should history repeat itself, a vaccine will eventually emerge to combat the COVID-19 virus, thus alleviating the threat of further immediate contamination.

Even though scientists have not identified how to stop a virus outbreak before it starts, advancements in medical technology over the past 17 years have drastically reduced the time it takes to develop and implement a vaccine after a new virus emerges.

The current coronavirus outbreak has been preceded by two similar outbreaks since 2003, Severe Acute Respiratory Syndrome (SARS) and Middle East Respiratory Syndrome (MERS). SARs originated out of China in 2002, spread worldwide and was contained within a few months. The World Health Organization (WHO) tracks deaths related to pandemics globally. The organization found that the SARs virus resulted in 774 deaths in 17 countries. MERs, also known as the camel flu, resulted in 862 deaths.

Joint efforts among international governments and nonprofit research entities have allowed extended research on emerging infectious diseases worldwide. Several groups and scientists from various countries are already underway trying to develop a vaccine for COVID-19.

Sources: The National Center for Biotechnology Information, WHO