Bringing you live news and features since 2006 

Market impact

Style Analytics examines the financial impact of the coronavirus


Style Analytics, a provider of factor analytics to the asset management industry, has examined the potential effects of the coronavirus outbreak on portfolios.

Damian Handzy, COO of Style Analytics, comments that the most surprising thing about their research into the likely financial effect of the coronavirus outbreak is that the closest analogy turned out to be the Chinese equity crisis of 2015.

“The 2015 situation appears to form a financial perspective closer to this than to all the other recent health and virus situations,” he says.

“We found that the global markets were all up during other contagious disease outbreaks such as Ebola or Sars, which kind of surprised us, but they were self-contained so didn’t scare the global markets.

“Also, China was a smaller part of the global economy at the time, whereas now it is pushing 20 per cent of world GDP.”

Style Analytics explains that the news about Coronavirus is changing fast. “The WHO has declared a global health emergency, the US has banned all foreigners who have visited China in the previous two weeks from entering the country and airlines around the world are cancelling flights to China, all as part of an effort to limit the spread of the disease.

“If history is any guide, we are only experiencing the early stages of this outbreak but containment efforts by governments in restricting travel may limit the worst of its impact to China. 2019-nCoV has a similar contagion rate to SARS, but appears to have a much lower mortality rate than either SARS or MERS, indicating that its bark may be worse than its bite.”

For its part, China’s financial regulators prepared a RMB1.2 trillion (USD173 billion) liquidity package to support markets on Monday February 3 and the People’s Bank of China is preparing to lower interest rates to support the economy.

Style Analytics writes that investors shouldn’t worry much about factor tilts if the virus remains contained to China but if the contagion results in a fear-scenario, investors might want to tilt towards low-volatility and away from small-cap stocks.

“Since the biggest impact of this virus will almost certainly be to the Chinese economy, the protection that low-vol and yield provided during the last Chinese equity crisis suggests a defensive strategy for factor investors as the world watches this latest crisis unfold.”

Latest News

News came last night from the US that the SEC has approved CBOE’s proposal to list and trade VanEck’s spot..
Irish domiciled funds surpassed EUR4.3 trillion AuM (Assets under Management) at end-March 2024, a 15 per cent increase in net..
European white label ETF platform, HANetf, has announced its total assets under management (AUM) has now exceeded USD4.31 billion...
New research from European ETF provider Tabula Investment Management shows investors are expecting improvements in ESG from the gold mining..

Related Articles

Timothy Rotolo, Range Funds
In 2023, Timothy Rotolo launched his business, Range Fund Holdings, the parent company for Range Indices and Range ETFs, followed...
Dan Miller, IQ-EQ
With just over a week to go till T+1 settlement begins in North America, Canada and Mexico, time is of...
Emily Spurling, Nasdaq
Last October’s ETF Express US Awards 2023 found Nasdaq winning Best Index Provider – ESG ETFs and Best Index Provider...
Vinit Srivistava, MerQube
Index provider, MerQube, launched in 2019, with the aim of providing a “technology-driven answer to the most complex, rules-based investment...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by