Whether or not the spread of the Wuhan virus (it just sounds scary, doesn’t it?) ends up triggering a buyable “dip” for US equity benchmarks which have scaled Everest-like peaks in the new year remains to be seen.
One thing we know for sure is that outsized losses are already in the books for some regional gauges, mainland sectors, individual names and specialized vehicles.
For example, early Thursday, in the course of documenting the worst pre-Lunar New Year holiday rout on record in A-shares, we noted that mainland-traded consumer staples suffered their worst week since October 2018. At the same time, H-shares have had a rough go of it, with the Hang Seng China Enterprises index falling 4% this week.
Looking a bit harder for evidence of “contagion” (just to perpetuate the virus meme), the Xtrackers Harvest CSI 300 China A-Shares fund is down a dastardly 7% this week, having fallen 4% Thursday and more than 3% on Tuesday, with Wednesday seeing only meager gains.
At the same time, IMAX is in the midst of one of the worst five-day runs in years. MKM Partners’ Eric Handler remarked that the health crisis came at the “worst time possible for exhibitors”. The Lunar New Year holiday is “by far the most frequented time of the year for moviegoing in the country”, he said, adding that it “has been a major benefit to IMAX in each of the last two years”.
IMAX gets nearly a third of its revenue from China. The shares are one bad day away from trading at their lowest levels since late 2011.
If you think that’s bad, just wait until you have a look at Wuhan Department Store Group. As you can imagine, this is not a good week to be a mall manager in Wuhan. The shares plunged 16% over the last several sessions in what, as far as I can tell anyway, is one of the five worst weeks in history for the name.
The city’s property-related stocks are under siege, as are transport companies, amid a lockdown aimed at stopping the virus from spreading.
Meanwhile, if you were looking for a buying opportunity in emerging market equities, the ETF is down more than 3.5% in the holiday-shortened US week. Barring a turnaround, this will be the worst week for the popular vehicle since the summer.
Finally, the onshore yuan, after a four-week stretch of appreciation amid trade optimism and improving economic data, logged its worst week since Trump re-escalated trade tensions at the beginning of August, prompting the PBoC to let the currency careen through the psychologically-important 7-handle.
There’s contagion out there. And you don’t have to look very hard to find it. Of course, if all you care about is the Nasdaq, then carry on, we suppose.