Investing is very abstract. Investors sometimes get caught with future event which is not foreseen at present. An example of an investment disaster is the effect of Kobe earthquake on the investor community. Kobe earthquake became the triggering point of a mass selldown in Nikkei even at that point, everything else was well. It caught many with commitment to margin, burnt and devastated. Many people still remember how it triggered the bankruptcy of Baring Bank due to the failure of it's currency trading department headed by Nick Leeson. While the former was bankrupted, the latter was jailed. Nevertheless, one important element of the bankruptcy is due to it uncovered exposure to japanese yen. Meanwhile, though it affected Nikkei index significantly, it only affects other world stock indices lightly.
With that historical frame of mind, I tried to research some facts regarding the swine flu pandemic to gather a conclusion on its effect on the world economy.
The 2009 Swine flu pandemic originated from Mexico and as at 30th of April, 11 countries has confirmed cases related to swine flu with 800 global caseload and 20 death, thus with mortality rate of 2.5%.
In order to contain the infection, Mexican President, Mr. Felipe Calderon ordered a partial shutdown on Mexico economy by asking the people to stay at home for 5 days. His order is logical and necessary but a little bit too late. Nowadays, people mobility is faster than the restraining order due to the convenient of air travel Eighty percent of the cases of swine flu outside Mexico comes from people who visited Mexico. Indeed, it has some capability in affecting other countries' economy if the same restraining order is given world wide.
Presently, there is a restraining order, but only localised at international airport. The health authorities either try to detect the symptom of swine flu either through passenger's declaration or termography unit or quarantine the passengers at the airport or some other localised place. It is still dependent of one factor - how smart the virus can evade detection. If I place this into an equation it will be like this.
Effect on economy = A.(Percentage of people who brought the virus) - B. (effectiveness of detection) + C.(Ability of virus to avoid detection).
The equation means that if the percentage of people coming from flight who hosted the virus is large, unless the health authority is very efficient to detect the symptom of swine flu, then it will have a significant effect on the world economies.
Directly, it is a matter of "how confident we are on the health authority to contain the sickness".
If there is a high confident level, it means that any significant selldown is a opportunity to buy.
Reversely, any selldown may mean the reversal of the current bull market.
Let pray that the disease is contained in Mexico and at international airports not for the sake of investing but for the sake of our health and wellness :)
With that historical frame of mind, I tried to research some facts regarding the swine flu pandemic to gather a conclusion on its effect on the world economy.
The 2009 Swine flu pandemic originated from Mexico and as at 30th of April, 11 countries has confirmed cases related to swine flu with 800 global caseload and 20 death, thus with mortality rate of 2.5%.
In order to contain the infection, Mexican President, Mr. Felipe Calderon ordered a partial shutdown on Mexico economy by asking the people to stay at home for 5 days. His order is logical and necessary but a little bit too late. Nowadays, people mobility is faster than the restraining order due to the convenient of air travel Eighty percent of the cases of swine flu outside Mexico comes from people who visited Mexico. Indeed, it has some capability in affecting other countries' economy if the same restraining order is given world wide.
Presently, there is a restraining order, but only localised at international airport. The health authorities either try to detect the symptom of swine flu either through passenger's declaration or termography unit or quarantine the passengers at the airport or some other localised place. It is still dependent of one factor - how smart the virus can evade detection. If I place this into an equation it will be like this.
Effect on economy = A.(Percentage of people who brought the virus) - B. (effectiveness of detection) + C.(Ability of virus to avoid detection).
The equation means that if the percentage of people coming from flight who hosted the virus is large, unless the health authority is very efficient to detect the symptom of swine flu, then it will have a significant effect on the world economies.
Directly, it is a matter of "how confident we are on the health authority to contain the sickness".
If there is a high confident level, it means that any significant selldown is a opportunity to buy.
Reversely, any selldown may mean the reversal of the current bull market.
Let pray that the disease is contained in Mexico and at international airports not for the sake of investing but for the sake of our health and wellness :)
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