East African stock markets have started feeling the impact of Coronavirus that has hit global economies after three countries in the region confirmed outbreak of the virus.
According to Economists the coronavirus fears have sparked investor rush for government bonds away from the volatile stockmarkets.
The UK-based business publication Financial Times, the debt rally globally has underscored the enduring appeal of bonds as a counterweight that gains when riskier investments decline.
Bond markets around the world remain some way short of the extreme levels hit in August and September last year, when more than $17 trillion of bonds carried a sub-zero yield.
The EastAfrican has learnt that stockmarket investors are worried of the long term economic impact of the Covid-19, and the market has started pricing in such fears pushing share prices to record lows, as investors dump stocks.
“The disruption will likely be negative for economic activity and asset prices. In the very near-term, there is a flight to safety, with negative implications for equity markets across emerging markets. Investors will also take the time to assess the growth fallout from the Coronavirus situation,” Razia Khan, Standard Chartered Bank’s chief economist in-charge of Africa and Middle East region said.
“While individual companies may buck the overall trend—the focus on mobile money in Kenya and elsewhere for example, home delivery services—it is a bearish environment for equities more generally. The global economy has not seen a shock of this nature before, with a significant disruption to services and household consumption across multiple geographies,” added Ms Khan
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