Friends, you must have heard a lot about Corona Virus You probably would have read a lot about this as well How much it impacts normal people as well But this has another impact which we don’t discuss a lot about That when a virus or illness like this comes How does that impact an economy or an investment Let us discuss in this video The impact of the Corona virus on the economy, the world economy and if I talk about the Indian stock market What are the industries this virus impacts I, Jagdeep Singh, welcome you to the Groww channel Let us start today’s video In which we are going to talk about Corona virus’ impact As a world economy, China’s economy And what are the industries in India that it impacts And how you should plan your investment as an investor When there is an unforeseen event like this Which directly or indirectly impacts the economy If I talk a little about the Corona virus, it is a very different virus that broke out first in China Which first impacted a lot of people in China If I talk about the numbers today, more than 30,000 people are infected by it today And more than 600 people have died because of it But this was its implications on health Now I will talk about how it impacts the economy And any virus attack that happened before this Like a similar virus to this was SARS What was the impact on the economy when that came If I talk about SARS, when it impacted China or the entire world economy That time the cost that was on China to fight against SARS That cost was of 40 billion dollars If I compare that to the GDP That was 1% of China’s GDP at that time Now I will talk about the Corona Virus How is the Corona virus impacting the Chinese economy If I talk about the world economy, the production, then 1/3rd of its production comes from China Which means that China is a very big industry Which manufactures a lot of things and directly or indirectly impacts the world economy a lot In that industry itself if I talk about a very important industry That is automobile industry Now you know that every place has an automobile manufacturing plant Like big companies that make automobiles like Hyundai Jaguar range rover Their production plants are in Europe, in India And in South Korea as well But their main raw materials, main component, the manufacturing of that comes from China Because of the Corona Virus, China was impacted a lot because of which their component manufacturing has come down a lot The direct impact of which has been on these big companies Like if I give you a big example The manufacturing plant in South Korea has been shut down for a couple of days Because their main raw material, component, that came from China That manufacturing of that has gone down a lot After Hyundai another important company in the automobile sector is JLR The main demand of which comes from China and a lot of its units are sold in China There was a very big production plant of it in China Which was closed in the recent days Because manufacturing wasn’t happening well there After the impact of the Corona virus happened in China China’s economy started to go down Because of which, as I have explained to you many times that when the economy goes down The Central bank of that country tries to improve the liquidity position of that country a lot So that demand can be created there again And by creating economic activities, the economy can go up again Because of which China’s central bank also reduced its interest rate But there wasn’t that much of a positive impact on China’s economy Apart from this China’s central bank also infused 150 billion Yuan in China’s economy So that their economy activity can restarted from there But it didn’t have much of an impact After that China’s stock market was opened And after that, China’s stock market went down by more than 8% in one day Which is a record for the past few years That China’s stock market goes down by so much in one day Now you must know that when a country’s economy goes down Its oil demands and requirements reduces Because higher the economic activity That much higher will the oil requirement be and the price of which will increase by that much in the world Because of which there was a slowdown in China’s economy So China has said it’s going to reduce it oil refining by 6 lakh barrels Which means that it will reduce the oil imports Because of which the demand of oil will go down and the price of oil will reduce And this happened as well And if we look at the price of oil today, it has come to 56 dollar per barrel Now you must be thinking was Corona virus the only virus that affected the world economy so much? Was there any epidemic or illness before this that directly or indirectly impacted the world index? I want to explain to you with an example What were the diseases in the past few years What were the epidemics that directly impacted the world index? As you can see on my screen that this graph is from 1970-2020 Which tells you, at different times, When new epidemics came, how did the MSCI world index move Now you must be wondering what the MSCI world index is So if I tell you about the MSCI world index It’s an index for the developed countries to see how the economy is for developed countries So if it goes up then it means that the economic activity is good And when it goes down it means that there is a problem there As you can see on the screen, that when major outbreaks took place Like SARS At that time, the economic activity was very less And at that time, the recession of 2002 was also taking place After this Swine flu came in 2009 EVen at that time the MSCI index went down a lot After that the Zika virus Ebola, and after that a new virus called Corona virus Because of which the MSCI index has gone down a little So this was China, how did this affect China’s economy But what’s most important for us is that we are Indian citizens and Indian investors And we directly or indirectly invest in the Indian equity market So how does this Corona Virus impact us Because I have told you in every video, that micro levels that are company specific How do they impact the company? But macro level factors which can be unforeseen factors Like from that, this is a very important case In that case how does this impact the industry that you are planning to invest If I talk about India then in India there are mainly four industries that China impacts a lot And the names of those four industries are, first, electronic industry Second, automobile industry Third, tourism industry Fourth, aviation industry Now let us understand one by one The Corona virus and its impact on China, how does it impact these industries First, I will talk about the electronics industry If I talk about India electronic goods sector, the raw materials used in that 50% of the raw materials in that is imported from China If there is a continuous problem in China then in the coming days There can be a problem in the electronic good sector Second, I will talk about the automobile sector As I told you sometime back that there is a lot of dependency on China for the automobile sector Because there are a lot of components in the automobile sector that are manufactured in China And after that when they are imported to India, they are used in manufacturing cars So in the coming days if this dependency on China is not resolved So there can be an impact on the automobile sector in the coming days Let us talk about the third and very important sector that is impacted a lot by the Corona Virus And this sector is the Aviation sector As you know that China has a very important place in the world connectivity Apart from that there are many Indians who travel to China Because of commercial purposes as well as tourism purposes But because of the Corona virus a lot of flights were cancelled Not only from India but in the entire world the flights that were operated by China Because of which there is a direct impact on the airlines companies Because their sales directly becomes lesser If I talk about the last sector that is impacted a lot by the Corona virus, that is the tourism sector And not only India’s tourism sector But a lot of countries in the world have been impacted when the Corona virus broke out What I told you about now was what are the sectors this virus impacts and how it impacts the economy But I will come back to a very important question How does this impact you as an investor As I always tell you that whenever you invest in any company You should invest for the longer horizon If I talk about the past, SARS was a virus that came out in 2003 And the world faced a recession in 2002 At that time the world index was very low But after the SARS the recovery that happened, took the market up So if we talk about the impact on investment, it won’t be that much as people expect Because you should see that the company that you have invested in If there isn’t a direct impact on its revenue and on its operations You shouldn’t be scared Because the investment you make, you do it in a proper company by looking at its business If its business doesn’t change, then you shouldn’t be afraid about your investment Instead you should keep those positions And by planning for the longer term you can think about further investments This video we made was purely for educational purposes Because I have made a lot of videos until today In which I have told you about micro level factors If I talk about micro level factors The company that you’re planning on investing in, how does its business operate And understanding that is quite simple to an extent But there are a lot of factors that are in the macro level, and are unforeseen events Like an example of an unforeseen event Which can directly or indirectly impact your investment So whenever you invest not only should you look at the micro level factors Which maybe you have started to look at already But when news like this comes out, we should learn from that as well That unforeseen impacts like this can impact our investments as well So this video we made was purely for educational purposes So that you can get an idea that these kinds of news Can impact your investments or your economy We will end today’s video with a question for you The next video we bring out will be a stock analysis, comment and let us know Which stock we should analyse If you haven’t yet subscribed to this channel, please subscribe Because we put up 2-3 videos every week on this channel for educational purposes Which can help a lot for you to become an intelligent investor Like our video, comment and answer our question And subscribe to our channel Happy investing!