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How to counter the coronavirus threat to your financial health


The maximum impact will, of course, be on China, but other countries are not immune to it because most economies are now globally integrated. Moreover, any slowdown in China, which is the world’s second biggest economy and accounts for close to 16% of the global GDP (gross domestic product), is also likely to impact other economies, including India, which imports various goods from China. Various economic activities in China have taken a hit. Offices, factories, schools and other establishments are being shut across the country, as more and more people get quarantined to contain the spread of the virus. Travel to and from China has also been restricted.

Such outbreaks are not uncommon—there was SARS in 2002-2003, Nipah in 2018 and Ebola in 2014-2016. So it makes sense to keep certain ground rules in mind. We give you a low-down on how a pandemic like coronavirus can affect your financial health and what you can do about it.

Do's and don'ts to keep in mind
Do’s and don’ts to keep in mind

Impact on investments

Financial planners said some of their clients are getting anxious about the likely impact of the coronavirus outbreak on the stock market and asking how they should deal with it? Should they exit some of their equity investments and invest later when the markets tank?

So far, the reaction of global equity markets, including Indian markets, has been limited, but experts said it could lead to a disruption in economic activities due to supply side constraints, which will result in market volatility.

“Concerns regarding the impact of coronavirus are very real, though the equity markets are brushing it off due to sloshing liquidity. Any disruption in Chinese economic activities would have a lasting and larger impact on global economic growth,” said Pankaj Bobade, fundamental research head, Axis Securities Ltd.

“The equity markets driven by positive earnings growth outlook would get a rude shock in case of limited or contracting economic activities due to disruption in supply chains from China,” he added.

Due to the fear and uncertainty in the markets about the scale and impact of the virus outbreak, gold prices have seen a rally as the commodity is considered a safe haven. But should you increase your allocation to gold? Experts said that such short-term events shouldn’t make you change the allocation to investments which are meant to achieve long-term goals.

What to do: “Investing in equities is advisable for the long term. Focusing on long-term goal with a risk-adjusted approach will ensure that such events do not unnerve you. If you had invested in a diversified equity fund, the manager would have pared down his exposure to sectors and companies that could be negatively impacted by events such as the coronavirus outbreak,” said Lovaii Navlakhi,managing director and CEO, International Money Matters Pvt. Ltd, a financial planning firm. Though you must stay on course for your long-term goals, it is during such times that an emergency fund comes handy.

“We are advising people not to worry and tinker with their long-term investments. The best way to deal with it is to have adequate emergency funds. As we have seen there have been situations like lockdown, they may also plan to keep some part of the emergency fund in cash in case the situation worsens, ” said Vishal Dhawan, founder, Plan Ahead Wealth Advisors, a financial planning firm.

Impact on travel

In order to curtail the spread of the virus, several countries have imposed travel restrictions to China. Some of them have imposed a ban on the entry of foreign nationals travelling from China. Many airlines have also cancelled their flights to and from China. Even individuals have cancelled or delayed their plans to travel not only to China but other neighbouring countries where there is a scare.

“The initial virus scare caused a dip in bookings for countries like China, Japan, Malaysia and Singapore,” said Aloke Bajpai, co-founder,, a travel and hotel booking website. “However, with a drop in new cases reported, the situation is now stabilizing and demand for travel is picking up,” he added.

Bajpai said some airlines have assured refunds to customers who hold on to their tickets now and cancel later in case the situation deteriorates. But remember that not all airlines will be providing this facility, and last-minute cancellation or booking can cost you more. Apart from this, you must prepare for possible medical emergencies, when travelling.

What to do: If you are still to book your tickets, especially for an international destination, you can cover your likely losses in the future by buying travel insurance. These policies generally provide a cover against any expenses or losses due to medical requirements or travel booking cancellations (in case the airlines cancels the flight due to reasons such as the coronavirus outbreak).

“If one is travelling overseas, travel insurance is a must-have, especially in a situation like this as it provide cover against emergency medical expenses, loss of baggage and cancellation of flight,” said Abhishek Bondia, principal officer and managing director,, an insurance broking firm.

“The widespread outbreak of coronavirus and current difficulties in its treatment protocol necessitates immediate top-of-the-line medical treatment to save lives. This underscores the significant importance of travel insurance as financial protection when you need it most,” said Parag Ved, executive vice-president and head, consumer lines, Tata AIG General Insurance Co. Ltd.

Impact on spending

China is a manufacturing hub and an export-oriented country with India being one of the biggest importers.

According to a report released last week by PhilipCapital, a stock broking firm, China accounts for 14% of the total imports of India. “Current understanding of coronavirus indicates that its impact is expected to last for Q4FY20 and improve thereafter. There will be a two-level impact—importers will be impacted due to supply-chain risks; exporters will suffer because of China lockdown,” stated the report. Therefore, the supply side disruption may impact prices.

According to the report, India imports electronic components, telecom instruments, auto components and other products from China. The price increase will depend on the segment’s dependency on China in terms of raw material as well as the inventory management of importers and how fast they can find replacements in case things deteriorate further.

In the auto segment, there could be a price rise due to supply side pressure, said experts. “Consumers may see car price hikes as car manufacturers have to bear extra burden due to rising logistic cost. We have inputs that freight prices are already signalling a three-time hike,” said Puneet Gupta, associate director, automotive forecasting, IHS Markit, a research and consulting firm.

“It will also lead to rising interest rates because the (monetary) policy response to supply-shortage inflation is to dampen demand,” said Tim Nicolle, founder and chief executive officer, PrimaDollar, a trade finance company.

What to do: If you are planning to buy goods such as electronic items or cars, don’t rush into the purchase just because of the scare. Evaluate the situation and then make a decision.

Mint take

Although the situation looks grim, governments across countries are taking measures to control the impact. Experts believe that India may benefit from the situation as importers of China may look for alternatives. “Over the long run, there is a high probability of a shift in the supply chains from China to India in almost all the areas; we are looking at the situation as ‘glass half full’ from the long-term horizon,” said Bobade.

Such outbreaks, typically, have a short-term impact on your financial health, so don’t panic and make hasty decisions. But it’s always good to be prepared for any eventuality. Have a health insurance for your family to meet sudden medical expenses, create an emergency fund and stay put with your investments.

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