As The Coronavirus Spreads, These Stocks Could Gain

As The Coronavirus Spreads, These Stocks Could Gain

about 4 years ago2 mins

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As cases of the Covid-19 coronavirus beyond China grow, stock markets around the world are falling. Some investors, however, are busy identifying firms that could benefit in the event of pandemic pandemonium… 😷

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What does this mean?

The rising risk of economic contagion has pushed up the price of “safe haven” investment gold in recent days – but not that of Japanese yen.

Yet while investors’ fears about an already-weak Japan's potential exposure to the virus also led to its stock market sinking 3% on Tuesday – in line with other countries’ – companies that stand to gain from the disease’s spread have seen their stocks rise.

The Japanese Nikkei 225 index took a tumble on Tuesday (Source: Yahoo Finance)
The Japanese Nikkei 225 index took a tumble on Tuesday (Source: Yahoo Finance)

It’s not just face mask makers; US biotech firm Gilead Sciences' share price increased 5% on Monday following news that one of its antiviral drugs was being rushed through trials in China with the blessing of the World Health Organization 😯

Japanese video conferencing company V-Cube, meanwhile, shot up 20% on Tuesday as investors bet that more employees would work from home. And the potential growth of “self-isolation” may also have insulated the likes of Netflix and Electronic Arts, as well as bleach maker Clorox and canned food company Campbell Soup, from the overall market malaise.

Why should I care?

It’s not all gravy, of course – besides some stocks performing even worse than their benchmarks (including concert promoters Live Nation and DEAG Deutsche Entertainment), the coronavirus also threatens livelihoods and lives.

And some investors are urging caution: while Gilead’s valuation has grown by $12 billion this month, its antiviral drug – even if effective – is unlikely to bring in enough revenue to justify this rise. (Check out our Pack on Investing In Biotech for more on this fascinating sector.)

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Nevertheless, every cloud has a silver lining – and every portfolio can be tweaked to provide some protection from market storms. Better protection than a surgical face mask, at any rate… 🙄

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