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The
Kuwaiti stock exchange
dropped by 10.98% today
1
March, 2020
The
working week in the Arab world runs differently to the West. Their
day of worship is Friday. The last day of the working week FOR THEM
is typically Thursday.
The
Kuwaiti stock market dropped by 10.98 percent in the first 30 minutes
of trading on Sunday morning (TODAY) as investors responded to the
spread of the coronavirus across the Arabian Gulf.
Thus,
on Monday here in the USA and elsewhere in the world, we are looking
in the face of a financial Bloodbath. There may be brief dead cat
bounces but people are starting to realize that stocks should for the
foreseeable be close to single digit P/E ratios due to the coming
locking of supply chains and 50-75% bankruptcies in the near term.
Most stocks are triple digit P/Es.
Investors
betting big against catastrophic diseases are watching the World
Health Organization closely as insurance bonds tied to whether the
organization labels COVID-19 a pandemic are set to mature in June.
$425M in World Bank catastrophe bonds set to default if coronavirus declared a pandemic by June
1
March, 2020
In
2017, the World Bank designed a new way to raise money: Pandemic
Emergency Financing bonds. Over $425 million worth of such bonds,
which bet against a global outbreak of infectious diseases and will
default if WHO declares the coronavirus a pandemic, were sold by the
World Bank in its first-ever issuance of catastrophe bonds. In the
event of no pandemic, investors would be paid a healthy annualized
return. Meanwhile, the World Bank could use the bonds to insure
itself against the risk of a global outbreak.
“As
an investor, we do not want to lose money,” said Chin Liu, a
portfolio manager at Amundi Pioneer, a Boston-based firm that
purchased the bonds as a way to diversify the company's $1 billion
catastrophe fund. “But then, we also understand if it’s
unfortunately triggered, it benefits every single person, including
ourselves, to keep the virus controlled.”
For
large-scale investors looking for above-average returns in a bloated
market, the bonds were the next logical place to hedge against
disaster. At the time of issuance, then-World Bank President Jim
Yong-Kim heralded the bonds as an opportunity to leverage "capital
market expertise to serve the world’s poorest people."
The
bonds were administered in two tranches, with Class A bond investors
receiving a return of 6.9% annually. Class B bond investors received
11.5% annually. The World Bank raised $225 million in Class A bonds
and $95 million in Class B bonds.
The
investors, mainly endowments and pension funds, have long bet against
natural disasters such as hurricanes, but the 2017 issuance of the
bonds marked a shift in the market. Before, investors were betting on
the wind speed of hurricanes, but now, they were betting on the
likelihood of an infectious disease that could tear through nations
across the globe.
"This
marks the first time that World Bank bonds are being used to finance
efforts against infectious diseases, and the first time that pandemic
risk in low-income countries is being transferred to the financial
markets," read a statement from the World Bank at the time of
issuance.
The
conditions under which the payout on bonds will default are staggered
based on how rapidly the disease spreads, the number of deaths
associated with the illness, and whether the virus crosses
international borders.
As
of Wednesday, the coronavirus has claimed the lives of more than
2,500 people and infected more than 80,000, with most cases contained
to mainland China. This week, the illness has begun to spread outside
of China — with more than 100 cases reported in Iran and a run on
stores in Italy after the number of infected patients increased 45%
on Tuesday alone.
New
York Stock Exchang
Bracing for Trading Floor
Closure Due to
Coronavirus
Outbreak – Report
1
March, 2020
Late
last month, the World Health Organization said that the coronavirus
outbreak is not yet a global pandemic, but called on countries
outside China to brace themselves for the possible start of one.
Fox
Business has reported that the possible escalation of the novel
coronavirus crisis may prod the New York Stock Exchange (NYSE) to
close down its trading floor in Lower Manhattan.
Appearing
on the Claman Countdown programme Friday, Fox Business’ Charles
Gasparino cited unnamed sources as claiming that the NYSE is
“beginning to prepare for the possibility that the floor might not
be able to open”.
“It's
a mixture of both humans and an automated trading system,
computerised trading system. So they're planning for a possibility
that the […] floor traders, the brokers, the designated market
makers can't make it in because they have to stay home”, he added,
arguing that the NYSE will have "some sort of a test run"
in the next few days.
Separately,
Gasparino asserted that major Wall Street companies are telling
employees to brace for the deterioration of the situation due to the
coronavirus, instructing them to “be prepared to work from home”.
“Test
your systems out, make sure your computer works, make sure you can
get into the company system to trade”, the firms reportedly pointed
out.
Stocks
Nosedive Further Amid Coronavirus Fears
The
remarks followed stocks sinking again on Friday amid
coronavirus-related concerns, leaving the Wall Street with its worst
week since October 2008.
The
Dow Jones Industrial Average lost 357 points, or 1.4%, to 25,409,
while the S&P 500 shrank by 24 points, or 0.8%, to 2,954.
Earlier, the Nasdaq Composite fell by 414.30 points.
The
developments came as World Health Organization (WHO) Director-General
Tedros Adhanom Ghebreyesus told reporters earlier this week that for
the moment, the WHO is “not witnessing the uncontained global
spread of this virus, and we’re not witnessing large-scale severe
disease or deaths”.
“Does
this virus have pandemic potential? Absolutely it has. Are we there
yet? From our assessment, not yet”, he added.
On
a global scale to date, the coronavirus disease has infected over
85,000 people, of whom 2,900 have died and nearly 40,000 have
recovered. The deadly epidemic has spread from the Chinese city of
Wuhan to over 55 countries so far, including the US, where the first
coronavirus death was confirmed in Washington state on Saturday.
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