For most of us, living through a global pandemic like the COVID-19 outbreak is a new experience. The last time this happened on anything like this scale was in 1918, when the so-called Spanish Flu infected some 500 million people around the world and killed nearly 20 million.

We’re seeing supply chain disruptions, travel interruptions and impacts to the global economy that go far beyond the typical viral outbreak, not to mention the millions around the world who have been personally impacted by this disease.

The coronavirus is having more of an economic impact globally than many anticipated. Nearly 20 years ago, when SARS hit, China was still focused on low-end production. Now, it’s a global powerhouse.

Apple, Ikea, Starbucks, and other big-name companies are temporarily shutting their doors in China. Meanwhile, factories responsible for producing car parts for Toyota and GM are delaying their production. Further, airlines aren’t flying into China, leading to a disruption in the travel industry.

The economic growth in China is anticipated to fall to 5.6 percent in comparison to the 6.1 percent it saw last year.

Many companies have stopped using factories in China due to the American tariffs imposed during the trade war of the Trump Administration. With the coronavirus in play, the trend may be accelerated as many people find that they are locked out of China until the pandemic is no longer a threat. Many companies are turning to Vietnam, Thailand, and other Asian countries to fill the void.

That’s the bad news.

Covid-19 vs. Past Pandemics

But there is reason for hope, based on lessons from the past.

For example, the 2002 SARS outbreak killed 800 people across 17 countries when it emerged out of the Guangdong province. At that time, it took approximately four months for the markets to feel the effects, leading to underperformance in the Hong Kong markets, a drop in airline stocks (that quickly bounced back) and little movement in industrials such as metals, mining and chemicals.

Chinese equities fell for a time, but global equities rallied, leading to growth in other parts of the world. Additionally, pharmaceuticals grew as a result of growing demand for medication and healthcare products.

The 2014-2016 Ebola outbreak, on the other hand, was largely contained to West Africa but the economic impact of the pandemic was significant. According to some estimates. the countries of Sierra Leone, Guinea, and Liberia lost a combined $2.2 billion in GDP in just 2015 alone. While that is sizable, it wasn’t as dramatic as it could have been – in the end, many people acted out of fear in the face of Ebola rather than true risk, helping the local economies bounce back once the initial scare had subsided.

When you look at how the global economy rebounded following the 2003 SARS epidemic, the lasting impact was nominal. Investments, production, retail sales and trade had returned to where they were at year-end 2002 by the second quarter of 2003.

And that was for a multi-year outbreak.

Depending on how long COVID-19 lasts (and there are conflicting opinions on that, ranging from the end of this year to becoming a permanent threat) its impact from an investment point of view could range from mild and contained (like Ebola) to wider ranging but still salvageable (such as happened with SARS).

But all of this is a longer-term question. In the short term, stay tuned in on what’s going on, understand any quarantine restrictions you might face and focus on maintaining your health and that of your family.

Over the coming weeks and months it will become clear which companies and industries are being impacted the most by this, and that’s when it will be time to make adjustments as needed. It’s never a good idea to chance course in the middle of the storm.

How to Protect Your Portfolio in a Pandemic

A pandemic may seem as though your investments are going to come crashing down. However, there are ways that you can protect your investments and adapt to the changes. Taking a unique approach to pandemic investing can ensure that you’re prepared for how the world economy will shift as a result of the virus.

When you look at how the global economy rebounded following the 2003 SARS epidemic, the lasting impact was nominal. Investments, production, retail sales, and trade had returned to where they were at year-end 2002 by the second quarter of 2003.

As such, with the coronavirus in play since January 2020, all could be resolved by the year-end. It may be better to ride out some of the downfalls with confidence that they will bounce back. If you choose to dump too many investments, it can cause a more detrimental outcome for not only your investments but a ripple effect throughout the rest of the economy.

Stay tuned in on what’s going on so that you can understand the quarantine restrictions, the countries that it’s affecting on a major scale, and what companies and industries are being impacted the greatest. This will allow you to make the various adjustments that you need to your portfolio with greater confidence.

Need ideas? A search on Magnifi is a good place to start. By identifying and researching ETFs and mutual funds by theme, you’ll be better able to invest in emerging opportunities once it becomes clearer what the overall economic impact is going to be.

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today.

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