IMPACT OF CORONAVIRUS

ON GLOBAL ECONOMY

Submitted By

Sheetal Jeevan Dahibavkar

UNDER THE GUIDANCE OF

Prof. Varsha Maheshwari

A PROJECT SUBMITTED IN PARTIAL

FULFILMENT OF MMS TO

VIDYALANKAR INSTITUTE OF TECHNOLOGY

Wadala (East), Mumbai 400 037

April 2020
 IMPACT OF CORONAVIRUS

ON GLOBAL ECONOMY

Submitted By

Sheetal Jeevan Dahibavkar

UNDER THE GUIDANCE OF

Prof. Varsha Maheshwari

A PROJECT SUBMITTED IN PARTIAL

FULFILMENT OF MMS TO

VIDYALANKAR INSTITUTE OF TECHNOLOGY

Wadala (East), Mumbai 400 037

April 2020

Signature of Faculty Guide Head of Department

 DECLARATION

This is to declare that the study presented by me to Vidyalankar Institute of Technology, in

completion of the Masters in Management Studies (MMS) under the “Impact of Coronavirus
on Global Economy” has been accomplished under the guidance of Prof. Varsha Maheshwari .
This work is original and has not been submitted earlier either as a whole or in part for the
award of any degree/certificate at this or any other Institution/University.

Date: Sheetal Jeevan Dahibavkar

Place: Mumbai 18106B1030
 Master of Management Studies Department

Vidyalankar Institute of Technology, Mumbai-400037

CERTIFICATE
This is to certify that the dissertation entitled “Impact of Coronavirus on Global Economy”
is a bona fide work carried out by Miss Sheetal Jeevan Dahibavkar in the Master of
Management Studies Department of Vidyalankar Institute of Technology, Mumbai and is
submitted in partial fulfillment of the requirements for the award of the degree of Master of
Management Studies in Finance.

Mrs. Varsha Maheshwari

Associate Professor
Department of Management Studies
Vidyalankar Institute of Technology, Mumbai

Forwarded by:

Dr. Amit Oak

Professor and Head
Department of Management Studies
Vidyalankar Institute of Technology, Mumbai
Date:
 ACKNOWLEDGEMENT
My project on Impact of Coronavirus on Global Economy has been a great learning
experience. I was exposed to the different areas of research in social cause and was also
able to learn about various economic policies through which I gained valuable
experience, which I will always recall with a sense of satisfaction and pride.

This is to acknowledge Prof. Varsha Maheshwari under whose guidance I have been able
to successfully complete this project and effectively come to a very successful
conclusion. She not only guided my project work, but also stood as a mentor in realizing
my potential. I thank her for introducing me to the field of artificial intelligence and for
providing the necessary tools for carrying out research work. Her invaluable advice,
unwavering trust and unconditional support helped immensely in timely and successfully
completion of the project.

I am thankful to Dr. Amit Oak, Professor and Head, Department of Management

Studies, VIT, for extending the departmental facilities for my research work. A greater
share of inputs and data from Mrs. Trupti Naik made this project report possible to its
rightful accuracy.

I would like to extend my thanks to Mr. Anant Amdekar, visiting professor and for
training me to think out of the box & study any problem from this root.

To all my colleagues who have helped me either directly or indirectly, I am grateful to

Mr Abhishek Jambahle, Mr. Runal Patil & Supriya Hanumanthkari for their
valuable inputs. This project would not have been possible without their help.

Lastly, I owe a special debt and gratitude to my parents Mr. Jeevan Sopan Dahibavkar
and Mrs. Vidya Jeevan Dahibavkar and my brother Shreyas Jeevan Dahibavkar for
supporting me in my endeavors.

Sheetal Jeevan Dahibavkar

 ABSTRACT

Corona virus one of the most dangerous disease which is spreading over the country
vigorously. It is one of the diseases caused due to close contact or by respiratory droplets
released when someone with the virus coughs or sneezes.

This is not only causing problem to the peoples, but it is badly affecting the largest
economy of china. As many businesses got affected most prominently the Airline
Industry. Also, the share market is getting affected as well as technology industry.

China’s growing global economic influence and the economic and trade policies it
maintains have significant impact on the world.
 TABLE OF CONTENT

Pg.
Sr. No Chapters
No
1 Introduction 1
2 Objectives 2
3 Methodology 2
4 Data Collection 3
5 Limitation 3
6 Literature Review 4
7 Global Economy 6
8 Brief Overview Of Wuhan And Its Economy 7
9 About Coronavirus 8
Impacts Of Covid 10
Impact Over Economy
 China 13
10  Italy 23
 US 27
 India 31
How To Invest In Crisis? 39
11 Conclusion 41
12 Recommendation 42
13 Scope For Further Study. 42
14 List Of References 43
 INTRODUCTION

China is the most populous country in the world. COVID-19 is a health threat and is fast
proving to be an economic threat as well. In December 2019, an outbreak of respiratory
disease caused by a novel coronavirus (named “2019-nCoV”) was first detected in
Wuhan City, Hubei Province, China. As of early February, the disease continues to
spread. Chinese health officials have reported tens of thousands of 2019-nCoV infections
in China, with the virus reportedly spreading from person to person in parts of the
country. 2019-nCoVinfections, most of them associated with travel to and from Wuhan,
are also being reported in a growing number of countries outside China.

This disease slowly and steadily started spreading out of country. But later on post
February it started spreading so vigorously that it affected almost every part of the globe.
And now it’s a pandemic threat for the world. This threat can be fought simply by staying
home and strictly following the rules laid down by the government.

1
 OBJECTIVES

Most of the investors make poor investment decision without studying the current
situation going on around as main objective behind any investment is to gain profit so
analyzing the situation and taking the decision is important.

The main focus of this study will be:

1) To understand the impact of corona virus on Chinese economy.

2) To analyze the current investment option other than china.
3) Also to understand how it impacted other countries economy as well.
4) To know which country will have more risk of this downfall.
5) Government Initiatives.
6) Impacts on airline industry.

As due to this analysis it would get easier for the business to trade and also to make the
decision in business wisely.

METHODOLOGY

This study has been undertaken to understand the current scenario on Chinese economy
as many other countries’ economy are dependent on it. As each investment decision is
interrelated to each and every factor which affects the decision.

This will give us a clear idea about the current situation of the economy.

2
 DATA COLLECTION

Here the data used is mainly secondary data collected from the official website of the
respective companies’ official website. Also, data has been collected from the published
sources, newspapers, and websites.

LIMITATION

As we all know the economy of the world is very huge but out of which the research is
limited to the top 4 economies which have got huge capital loss.

The research is limited to top 4 economies because these are the economy which got
badly affected due to corona virus as china is the world’s largest manufacturing economy.
So any crisis happens over here affects the global economy.

3
 LITERATURE REVIEW

Over times, the world is exposed to the spread of various epidemics which may inflict
humans, animals or birds in different areas spreading fears and killing millions of people
like Ebola. The strong impact of a particular epidemic depends on the extent of its spread
in the infected area and the time it consumes. This study deals with epidemics and their
relationship with the economic activities, the Gross Domestic Product (GDP), their
various economic impacts in general while handling the case study of Ebola epidemic in
West Africa in particular as it is considered as the most recent type of the epidemics. The
paper assumes that epidemics have direct and indirect negative impacts on all economic
and social aspects in the infected areas particularly the poor areas. The paper depends on
the descriptive analytical approach and the case study approach. The total economic
impacts of epidemics can be calculated in a particular area by calculating the differences
the annual growth rates in the scenario case of the epidemic spread in a medium, small or
large degree or in the case of the absence of an outbreak of an epidemic and the period
length of the epidemic spread. In order to follow up the epidemics spread the study
recommended that the international community must act very swiftly to avoid this crisis
through the important improved of regional and international cooperation and it is
essential to draw on lessons learned from other countries’ experiences.

Uncertainties over the Wuhan 2019 Novel Coronavirus (2019‐nCoV), which has killed at
least 1,775 people and sickened more than 70,000 as of February 17,1 has interrupted
global trade and supply chains, depressing asset prices, and forced multinational
businesses to make hard decisions with limited information.

Because of Wuhan 2019 Novel Coronavirus (2019‐nCoV) outbreak around the world,
global trade and supply chains have been interrupted by the uncertainties of this
unexpected event. In this unexpected event, it is important for the customers and
businesses to make right decisions at the right time. Social networking sites have become
important for information sharing and online business effectiveness and played important
roles in this unexpected event for the customers and businesses to make right decisions
with limited information. They can be a good choice to share information in real-time as

4
they are recognized as a significant tool for public health and economy development.
This work highlights the impact of Coronavirus outbreak on the global economy and the
role of social network sites in sharing the customers' and businesses' information and
concerns about the Coronavirus outbreak.

As per the United Nations Population Division, World Health Organization (WHO),
Food and Agriculture Organization (FAO), International Monetary Fund (IMF), and
World Bank WHO estimated that the fatality rate of the coronavirus has been estimated at
around 2 percent (WHO 2020), substantially lower than Middle East Respiratory
Syndrome MERS (34 percent) and Severe Acute Respiratory Syndrome SARS (10
percent) (World meter, 2020). The incubation period of the virus ranges from2 to14 days
(World Health Organization (WHO), during which the virus is contagious but the patient
does not display any symptoms. While all population groups can be infected by the 2019-
nCoV, seniors and people with pre-existing medical conditions (such as asthma,

diabetes, heart disease) appear to be more vulnerable.

5
 GLOBAL ECONOMY

The economic history of the world is a record of the economic activities (i.e. the
production, distribution and consumption of goods and services) of all humans, spanning
both recorded history and evidenced prehistory.

Economic history as it relates to economic growth in the modern sense first occurred
during the Industrial Revolution in Britain and then in the rest of Europe, due to high
amounts of energy conversion taking place.

Economy as also faced financial crisis in 2007-2008 also known as the global financial
crisis (GFC) was a severe worldwide economic crisis. It is considered by many
economists to have been the most serious financial crisis since the Great Depression of
the 1930s. The crisis began in 2007 with a depreciation in the subprime mortgage market
in the United States, and it developed into an international banking crisis with the
collapse of the investment bank Lehman Brothers on September 15, 2008.

Excessive risk-taking by banks such as Lehman Brothers helped to magnify the financial
impact globally. Massive bail-outs of financial institutions and other palliative monetary
and fiscal policies were employed to prevent a possible collapse of the world financial
system. The crisis was nonetheless followed by a global economic downturn, the Great
Recession. The Asian markets (China, Hong Kong, Japan, India, etc.) were immediately
impacted and volatilized after the U.S. sub-prime crisis.[7] The European debt crisis, a
crisis in the banking system of the European countries using the euro, followed later.

Our Global has faced a lot of ups and down but also stood strong to face the crisis.

6
 BIRTH PLACE OF CORONAVIRUS

WUHAN ECONOMY

Wuhan is the capital city of Hubei province in Central China. Wuhan, which is one of the
most populous cities of central China, has population of around 11 million and a land
area of around 8,500 km2(Gain Report, 2018). Cheng and Zhou (2015) highlight the vital
role of Wuhan in the economic, transportation and educational sectors of the Chinese
economy. According to Cowley et al. (2018), Wuhan lies at the very center of China’s
transportation network, linking north with south and east with west. In recent times,
Wuhan established itself as one of the largest hubs of transportation, industry, commerce,
culture and education in central China (Bovenkamp and Fei, 2016).Wuhan has a strong
industrial base, and has become an economic powerhouse of central China. High
technology industries such as chip-making and biomedicines are important high-tech
industries (Wong et al. 2019).The automobile industry is another major contributor to the
economy. Different economic and development zones include the Wuhan East Lake Hi-
Tech Development Zone, Wuhan Economic and Technological Development Zone, and
Wuhan Wujiashan Economic and Technological Development Zone. The Wuhan East
Lake Hi-Tech Development Zone includes Wuhan has attracted significant foreign direct
inflows due to its abundance of skilled worker and a large and growing regional
market(Miura, 2017). Investors in the city over the years include large numbers of
Fortune Global 500 firms (Wong et al. 2019).Overall, the growth of Wuhan economy is
directly linked with the growth of Chinese economy. Being a major industrial, financial
and transportation hub of central China, of the city plays an influential role in the Chinese
economy. That is, Wuhan contributes substantially to the overall growth of the Chinese
economy. In2018, the economy of Wuhan grew by10.7 percent and its share of China’s
GDP increased to 1.6 percent (Daxueconsulting, 2019). It also accounted for more than
60 percent of the GDP of Hubei province (Gain Report, 2018). To sum up, Wuhan is a
major economic hub with close economic linkages with the rest of China. Therefore, a
severe economic shock to the city will reverberate throughout the Chinese economy

7
 ABOUT CORONAVIRUS

COVID-19 appeared in Wuhan, a city in China in December 2019. Coronaviruses (CoV)

are a large family of viruses that cause illness ranging from the common cold to more
severe diseases such as Middle East Respiratory Syndrome (MERS-CoV) and Severe
Acute Respiratory Syndrome (SARS-CoV). A novel coronavirus (nCoV) is a new strain
that has not been previously identified in humans.

Common signs of infection include:-

 Respiratory symptoms
 Fever
 Cough
 Shortness of breath
 Breathing Difficulties

In more severe cases, infection can cause pneumonia, severe acute respiratory syndrome,
kidney failure and even death.

Standard recommendations to prevent infection spread include regular hand washing,

covering mouth and nose when coughing and sneezing, thoroughly cooking meat and
eggs. Avoid close contact with anyone showing symptoms of respiratory illness such as
coughing and sneezing.

8
9
 IMPACTS OF COVID19

This disease not only affected the humans, but this has created a huge loss to various
economies over the global. Various businesses especially manufacturing company those
are dependent on china as china being the world’s largest manufacturing economy also
suffering from the problems. China makes up a third of manufacturing globally and is the
world's largest exporter of goods.

Italy, South Korea and Iran are struggling to control the spread of the virus. In the United
States, where there are now more than 400 confirmed cases, the government has been
criticized for fumbling its rollout of test kits and allowing the virus to spread in
vulnerable communities like a nursing home in Seattle. The outbreak now threatens
global growth and is intensifying a backlash against immigration and globalization.

The economy has ground to a near standstill, and many small businesses say they may
soon run out of cash. Patients with critical illnesses are struggling to find timely care, and
some have died. Hundreds of millions of people have been placed in some form of
isolation. As of Friday, about 827,000 people remained under quarantine in Beijing

10
The COVID-19 outbreak has generated both demand and supply shocks reverberating
across the global economy. Among major economies outside of China, the OECD
forecasts the largest downward growth revisions in countries deeply interconnected to
China, especially South Korea, Australia, and Japan. Major European economies will
experience dislocations as the virus spreads and countries adopt restrictive responses that
curb manufacturing activity at regional hubs, including in Northern Italy.

At the sectoral level tourism and travel-related industries will be among the hardest hit as
authorities encourage social distancing and consumers stay indoors. The International Air
Transport Association warns that COVID-19 could cost global air carriers between $63
billion and $113 billion in revenue in 2020 and the international film market could lose
over $5 billion in lower box office sales. Similarly shares of major hotel companies have
plummeted in the last few weeks and entertainment giants like Disney expect a

11
significant blow to revenues. Restaurants, sporting events, and other services will also
face significant disruption. Industries less reliant on high social interaction, such as
agriculture, will be comparatively less vulnerable but will still face challenges as demand
wavers.

Disruption to commerce

The shortage of products and parts from China is affecting companies around the world,
as factories delayed opening after the Lunar New Year and workers stayed home to help
reduce the spread of the virus. China is known as largest manufacturing hub so crisis in
china affects the world by one or the other means.

12
 IMPACTS OF COVID ON VARIOUS ECONOMIES

Impact on China:

China which is the leading and largest manufacturing economy has got affected due to
coronavirus. Single diseases is making Chinese economy to get slow down.

In Beijing, traffic was light on Friday afternoon during what would usually have been

China's service sector had its worst month on record in February as new orders
plummeted to their lowest level since the global financial crisis, a business survey
showed on Wednesday, with economists urging swift support to avoid mass bankruptcies.
Business activity almost ground to a halt as tens of millions of people were forced to stay
at home amid strict travel restrictions while many restaurants, malls, and movie theatres
remained closed, even as some provinces lifted curbs. "Stagnating consumption amid the
coronavirus epidemic has had a great impact on the service sector," Zhengsheng Zhong,

13
director of macroeconomic analysis at CEBM Group, wrote in a note accompanying the
Caixin PMI release.’

China's government needs a robust services sector to cushion a prolonged slowdown in

manufacturing and investment and create jobs for workers laid off in other areas.

Worst sales since financial crisis

China's February services PMI showed the steepest decline in new work since November
2008 while outstanding orders surged to a record high as many were unable to deliver
services and temporarily closed shop due to the outbreak.

Demand shrank the most at home but new orders from overseas also fell sharply from the
previous month. Export demand fell the most since the sub-index started in September
2014.

Services companies shed jobs for the first time in nearly a year and a half with the
employment sub-index hitting its lowest ever. At the same time, some firms are
struggling to recruit staff due to travel restrictions.

To increase sales, firms have lowered prices for the third time with discounting at its
most aggressive in almost eight years. Meanwhile, expectations regarding the one-year
outlook for business became the gloomiest since the series began in 2005.

Starbucks which closed more than half its roughly 4,300 stores in China, delayed a
planned update to its 2020 forecast and said it expects a material but temporary hit.

McDonald's, which closed several hundred of its roughly 3,300 stores in China, said
overall impact on profits, would be "fairly small" if the virus stayed contained in China.

14
Customers are buying less

Fear of the coronavirus outbreak means that some people are choosing to avoid activities
that might expose them to the risk of infection, such as going out shopping. Restaurants,
car dealerships and shops have all reported a fall in customer demand. Chinese car sales,
for example, dropped by 92% during the first half of February.

More carmakers, like Tesla or Geely, are now selling cars online as customers stay away
from showrooms. Tesla warned a 1-1.5 week delay in the ramp of Shanghai-built Model
3 cars could slightly hurt March-quarter profit after China ordered a shutdown of the
factory. Tesla is also evaluating whether the supply chain for cars built in its California
plant will be affected.

Some car makers including Nissan and Hyundai temporarily closed factories outside
China because they couldn’t get parts. Toyota Motor shut factories in China through
February 9

Hyundai Motor said it planned to halt South Korean production of a sport utility vehicle
this weekend to cope with a supply disruption caused by the virus outbreak. Jaguar and
Land Rover parent Tata Motors expects the outbreak to hamper production in China and
hit profits. Sangyong Motor said it would idle its plant in the South Korean city of
Pyeongtaek from February 4 to February 12 for the same reason.

15
Hotels, Booking Platforms, Agencies:

InterContinental Hotels and Hyatt Hotels said they would allow customers to cancel for
free reservations booked for China for specific dates.

Ctrip China's largest online booking platform, said more than 300,000 hotels on its
platform had agreed to refunds on bookings between January 22 and February 8.

Fliggy, Alibaba's booking site, offered similar refunds, as did several Chinese and
European tour operators.

16
Smartphones:

Shipments of smartphones are also expected to take a big hit in the first half of 2020,
before seeing a recovery later on. Apple was one tech giant who said sales had been
affected by low customer demand. Apple’s manufacturing partner in China, Foxconn, is
facing a production delay. Apple also blamed the warning on slowed demand for its
products among China’s increasingly affluent consumers, due to store closures and
reduced operating hours.

And it’s not just Apple that’s been hurt by the sudden constriction of China’s massive
consumer market. From South American ranchers to Vietnamese rice exporters and
American farmers, a broad range of global economic players are starting to feel related
effects. Thailand, where more than one-quarter of all visiting vacationers last year were
Chinese, has seen its tourism industry suffer,

According to the Research firm, Canalys, “Vendors’ planned product launches will be
canceled or delayed, given that large public events are not allowed in China”. Because of
this, it’s going to take time for vendors to change their product launch roadmaps and
would further reduce the 5G shipments. Moreover if factories fail to restore and continue

17
their production in its fullest capacity it would further prevent brands from bringing forth
their newer products to the market. Also talking about how the factories are holding up
amidst the deadly Coronavirus spread when it comes to production, Apple will be
extending its retail store closures in China while Foxconn will be resuming its production
at a plant in the city of Zhenghzo.

It will also reopen a major plant in the southern city of Shenzhen. Huawei’s
manufacturing capacity is also running in a normal way while Oppo’s manufacturing
capacity can be guaranteed effectively because of its plants that it has overseas. It’s quite
evident that the fatal Coronavirus epidemic is sure to take a toll over China’s Smartphone
sales but it’s also going to put a major damper on the overall global sales of smartphones.
This can be blamed on a slew of different reasons including shutting down of Chinese
factories, delay in resuming work, untimely delivery of the key Smartphone components,
and zero clarity around when the employees would return for work.

Samsung Electronics said it had extended a holiday closure for some factories in line with
Chinese government guidance but declined to comment on the impact. Samsung affiliate
and battery maker Samsung SDI, which counts Volvo among its customers, warned of a
hit to its March-quarter earnings. SK Hynix, which has a chip plant in the eastern Chinese
city of Wuxi, said the outbreak had not yet disrupted production but that could change if
the situation was prolonged.

18
19
Falling oil demand, stock markets down

China is the world’s biggest oil importer. With coronavirus hitting manufacturing and
travel, the International Energy Agency (IEA) predicted the first drop in global oil
demand in a decade.

"Covid-19 (coronavirus) has spread beyond China and our 2020 base case global oil
demand forecast is cut by 1.1 mb/d. For the first time since 2009, demand is expected to
fall year-on-year, by 90 kb/d," the IEA said in its monthly report for March 2020.

On 9 March, oil prices lost as much as a third of their value - the biggest daily rout since
the 1991 Gulf War, as Saudi Arabia and Russia signaled they would hike output in a
market already awash with crude, after their three-year supply pact collapsed.

20
Impact on air travel

On 5 March - before the US travel ban was announced - the International Air Transport
Association (IATA) predicted the COVID-19 outbreak could cost airlines $113 billion in
lost revenue as fewer people take flights.

“The industry remains very fragile,” Brian Pearce, the IATA’s chief economist, told the
Associated Press. “There are lots of airlines that have got relatively narrow profit margins
and lots of debt and this could send some into a very difficult situation.”

The travel and tourism industries were hit early on by economic disruption from the
outbreak. Besides the impact on airlines, the UN’s International Civil Aviation
Organization (ICAO) forecasts that Japan could lose $1.29 billion of tourism revenue in
the first quarter due to the drop in Chinese travelers, while Thailand could lose $1.15
billion.

Indonesia once aimed to attract 10 million Chinese tourists per year. Now, it’s poised to
lose about $4 billion in tourism related revenue as a result of COVID-19. Already,

21
thousands of Chinese-speaking tour guides have lost their jobs, and tensions between the
country and China are running high.

Walt Disney shut its resorts and theme parks in Shanghai and Hong Kong.

As per above image we can state that Virus has outbreak since 1 st Quarter of 2020.

22
 Impact on Italy

Italy is among the most affected countries with coronavirus outbreak across the globe, as
the incidences rising at a significant pace than any other country. In Italy, the death toll
from COVID-19 surpassed 5,000, witnessing a sharp increase from the last few days.

COVID-19 pandemic has a devastating impact on the Italian economy, as industrial

output fell significantly. Italy had a considerable position in the value of industrial
production in the EU member states. For instance, as per the Eurostat, more than 75% of
the value of sold industrial production in EU 28 was generated by six member states,
including Germany, Italy, France, UK, Spain, and Poland with 28%, 16%, 12%, 9%, 8%,
and 5%, of total EU respectively (Eurostat). The country accounted for nearly 2.4% ($2.1
trillion) of the world's GDP in 2018.

As per the International Trade Administration (ITA), Italy's third-largest destinations for
exports is the US, which totaled $50.1 billion value of the country's exports to the US in
2018. Italy's small and medium enterprises (SMEs) sector has a considerable proportion
of firms that contribute approximately one-third of value to the economy and half of total
employment in the country. As Italy's economic structure is heavily dependent on SMEs,
the spread of coronavirus is significantly affecting the economy of Italy. SME relies on
loans and finances to meet their business requirements. Due to the vulnerabilities facing
by the Italian financial sector amid COVID-19, SMEs operations are negatively affected,
which in turn, is leading to a significant decline of the Italian economy.

Based on industry classification, the Italy economy is segmented into automobile, food &
beverage, aviation, BFSI, retail, travel and tourism, healthcare, personal protective
equipment, and others. Due to the epidemics of COVID-19, the Italy government has put
lockdown strategy to limit the COVID-19 pandemic. As a result, major automobile
companies have temporarily shut down their factories to minimize the spread of
coronavirus. For instance, in Italy, Ferrari S.p.A. has suspended production for two weeks
coupled with Italian government orders for nationwide lockdown due to the COVID-19
epidemic.

23
In the healthcare sector, there is a surge in the demand for hospital supplies and
equipment amid COVID-19 effect in the country. The Italian government has asked Siare
Engineering International Group s.r.l., to augment its production of ventilators from 160
to 500 per month, as death toll surpassed 5,000. Further, General Electric Co.,
Honeywell, and 3M increased their efforts for the production of hospital equipment to
fight against coronavirus.

General Motors and Ford Motors have all declared the possibility of utilizing their
facilities for the production of ventilators. In addition, automakers are shifting their focus
towards manufacturing of personal protective equipment to prevent the spread of
Coronavirus. For instance, Fiat Chrysler Automobiles (FCA) declared that it would start
production of face masks in the coming weeks. It will donate the critical medical
equipment to healthcare workers and first responders. The company plans to produce 1
million face masks a month, which will be donated to emergency medical technicians
(EMTs), police, firefighters and workers in healthcare clinics and hospitals.

Some major companies affected by COVID- 19 outbreak include Ferrari S.p.A., Fiat
Automobile S.p.A., Alitalia - Societ Aerea Italiana S.p.A., Siare Engineering
International Group s.r.l., and Banca Sella S.p. A. Due to the COVID-19 epidemics,
Italian banks have been focusing on Bitcoin trading platforms to buy and sell Bitcoin.

For instance, Banca Sella S.p.A., Italian bank declared to introduce Bitcoin trading
services for its existing mobile banking customers. Nearly 1.2 million customers will be
provided Bitcoin trading service through the bank's HYPE mobile banking platform. This
will allow its customers to get complete control over their funds without any stock
exchange interference and pay for products and services with the use of crypto. Due to
lockdown in Italy, Banca Sella S.p.A. bank has been taking interest in Bitcoin as a safe
way to transfer money globally.

24
Northern Italy currently is the center of the COVID-19 outbreak in Europe. Italy expects
COVID-19 to result in a lower GDP for at least two months. The government has
announced a spending allocation of approximately $28.3bn to deal with the coronavirus
impact.

Italy placed its 60 million residents under lockdown, as the number of cases of the
COVID-19 virus throughout the country continues to rise. In less than a month, Italy has
gone from having only three cases of the coronavirus to having the highest number of
cases and deaths outside of China, with 463 deaths and at least 9, 172 of people infected
throughout all 20 regions of the country. The number of cases rose by 50% on March 8
alone. Italy also faces an above average mortality rate of 4%.

Tourism

Lombardy, the region most affected by the outbreak, account for one-fifth of Italy’s GDP.
The Italian tourism sector, which makes up 13% of the country’s GDP, is projected to
lose $8.1 billion, according to the Associated Press, as a result of 32 million fewer
foreign travelers.

The economic crisis could push Italy into a recession. According to Berenberg bank
which before the outbreak estimated that Italy’s GDP would contract by 0.3%, now
forecasts it will fall by 1.2% this year.

Budget

Before the coronavirus outbreak Italy was already struggling with a public debt that is at
134% of the country’s GDP. But in the Europe Union countries are not supposed to have
debt that is higher than 60% of their country’s GDP. “With the increased spending that
comes with having to support people and businesses, the deficit might explode. An
economic slowdown in Italy, a country in the Euro zone, will have impacts on the rest of
the continent.

Also the Deputy Economic Minister of Italy Laura Castelli said in one of her interview
with Rai Radio 1 that mortgages, taxes, everything is suspended as a result of the

25
lockdown. The government has also created a support package of $8.5 billion for families
and businesses affected by virus. But this support packages could affect the long term
implications of spending.

Stock Market

From March 17, market regulator Consob suspended short-selling on the Milan stock
market for three months.

European markets screeched lower with the FTSE MIB index closing down 5.43% at
23,427. Shares of Italian banks fell sharply while the stock of Juventus soccer club was
briefly halted after falling 11%. The virus will be another blow to Italy’s already weak
economy which is only expected to grow 0.5% in 2020, according to Bank of Italy
forecasts made in December. Earlier in February, and before the virus hit the country, the
bank warned that the coronavirus could have a significant impact on the Italian economy.

Airlines stock were the most which got hampered majorly due to COVID19 there is no
stock showing green sign.

Shares of easyJet PLC EZJ, -1.55% dropping 15%

Ryanair Holdings PLC RY4C, +1.98% down nearly 14%.

Air France-KLM SA AF, +12.68% fell 10%.

26
 Impact on US

As the novel coronavirus (COVID-19) rips through America’s biggest cities, its effect is
being felt far beyond the over 140,000 Americans who are confirmed infected. The
quarantines and lockdowns that are needed to fight the virus’s spread are freezing the
economy, too, with unprecedented force and speed. The stock market has sunk a quarter
from its peak last month, wiping out three years of gains. Last week, meanwhile brought
news that a record 3.28 million Americans applied for unemployment benefits, the
highest number ever recorded. Unemployment is shooting up far faster than it did during
the 2008 recession, a sign the economy is headed toward recession.

To understand COVID-19’s hit on the economy, consider its effect on different

industries. Consumption makes up 70% of America’s gross domestic product (GDP), but
consumption has slumped as businesses close and as households hold off on major
purchases as they worry about their finances and their jobs. Investment makes up 20% of
GDP, but businesses are putting off investment as they wait for clarity on the full cost of
COVID-19. Arts, entertainment, recreation, and restaurants constitute 4.2% of GDP.
With restaurants and movie theaters closed, this figure will now be closer to zero until the
quarantines are lifted. Manufacturing makes up 11% of U.S. GDP, but much of this will
be disrupted, too, because global supply chains have been obstructed by factory closures
and because companies are shutting down factories in anticipation of reduced demand.
Ford and GM, for example, have announced temporary closures of car factories.

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US stocks surge 1,000 points following worst day since 1987 crash. China is not the only
country where the services sector has weakened. The services sector in the U.S., the
world’s largest consumer market, also contracted in February

United States stock markets surged at the open of trading on Friday, in a volatile week
that has seen coronavirus fears kill off the 11-year bull run in stocks, and sink US equity
markets to record lows not seen since the 1987 crash.

All three indexes had moved off their opening highs 30 minutes into the trading session

The US economy has gone from recession-proof to recession-bound in a

month
The US economy is facing two serious shocks

1) The spread of the coronavirus 2) The drop of oil prices.

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The Texas economy is still heavily reliant on oil, and has benefited immensely from the
US shale boom. But it's still about to see a serious hit to drilling activity, with a brutal
impact on activity there and in other oil-exposed states.

Due to the ongoing crisis he OPEC oil cartel tried to cut output in the face of falling
demand, but Russia refused to join the bloc's commitment to pump less. As a result,
Saudi Arabia announced over the weekend they would increase production and try to
undercut other producers.

As there is sudden change in expected supply and falling demand led to a huge drop in oil
prices which makes virtually all US shale drilling uneconomic for the time being we can
also say that in turn we can expect the oil shock to hurt US business investment data and
also add another headwind for US consumers. While lower oil prices will help offset
some of the impact created by COVID-19, the US is now a net exporter of petroleum on a
volume basis and one of the world's largest producers. This means that thousands of more
workers depend on the industry, whether directly or indirectly, so the negative effects of
an oil price drop are nearly equal to the boost from cheaper gas at the pump.

29
International stock returns by industry

30
 Impact on India

China is a major player in the world market and because of the way India is integrated
with the Chinese economy will have a huge impact on the Indian economy.

Mouth masks, sanitizers and hygiene products have become expensive

drastically:
This is a direct effect of coronavirus outbreak in India. The WHO advises against using
of pollution masks and sanitizers the market could face a high demand which has already
begun as India records cases in Rajasthan, Delhi, Telangana and Maharashtra. Currently
prices of N95 masks have shot up online. Sellers like Amazon and Flipkart are listing
masks ranging from INR 499 to over INR 1,000. Some products are unavailable already
and some feature original price tags of 9,999 with a considerable discount. As businesses
rush to increase prices due to demand and health care sectors suffer due to unavailability,
it isn’t hard to predict a scarcity of masks as people head to local chemist stores and
shopping websites to get their stock. Similarly, hand sanitizers are being installed in most
stores, restaurants and malls in the country this could mean an increase in corporate
orders along with the existing household demands.

Medicines and health care costs are expected to increase:

The Indian pharmaceutical sector is dependent on raw materials from China. With
lockdowns in China the supply route has been disrupted to a large extent. The stock of
raw materials for medication will find it difficult to find its way to the Indian
pharmaceutical industry. This is already affecting the prices of medicines. As per CRISIL
reports the cost of common drugs like Paracetamol which is a common medicine has
increased by a whopping 40% while 69% of India’s drugs are sourced from China in bulk
purchases.

Apart from this expense is also made by government for the treatment, tests and
prevention of the spreading of the virus.

31
Industries dependent on cheap labour would take a hit:
While the Ministry of Health and Family Welfare prepares for a health emergency, Union
Minister Harsh Vardhan has announced a multi-step strategy to combat COVID-19.

The plan is for India to virtually make itself isolated from the rest of the world in terms of
air travel. Any foreign nationals or returning Indians will have to specify a compelling
reason to enter the country if they aren’t on diplomatic missions from the UN and the
WHO. On a state level the government is trying to curb community transmissions as
Section 2 of the Emergency Diseases Act has been issued by the Ministry of Health and
Family Welfare. While immigration will be checked there are several parts of India the
government can’t even begin to screen. Cheap labour is a large part of the Indian
economy. As the virus travels through the populated country, local transmissions could
very well add to the count of cases. Factory workers and labourers aren’t given the health
care and employment benefits to deal with viral outbreak. The working population will
most likely be affected by poor health which could result in lack of attendance, crippling
sectors that rely on cheap labour. Containment then becomes a difficult task.

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Smartphone and electronics sales will be affected almost directly

Smartphone sales in China are expected to drop by 50% as stores are currently under
lockdown. Product launch events are starting to get postponed or cancelled altogether.
Since China is a huge player in the Smartphone market the supply chain will face a huge
impact. This could result in price increases. Apart from phones the home appliances
market will suffer too considering that many of the parts and whole units are
manufactured and exported from China. India imports everything from air conditioners
and kitchen appliances from Chinese suppliers and that is currently in jeopardy so we can
expect these prices to go up as well. This will happen much later in the fourth quarter of
the financial year.

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Airfare, petrol/diesel and meat prices are dropping

While the cost of several essentials is rising, some products and services are expected to
drop in terms of pricing. Air tickets, for example, are currently cheaper than usual as
outbreak hit countries are popular tourist destinations. Flight tickets to Italy and South
Asian countries are relatively cheap. This isn’t a positive sign for the economy and it
endangers passengers who are making fresh bookings as per reports mentioned on
Yatra.com. Apart from airfare, petrol and diesel prices are going down as prices drop
globally. China is the largest importer of oil and that demand is considerably low as well.
Additionally, chicken, egg and meat sales are going down owing to the stigma against the
consumption of non-vegetarian food during the coronavirus outbreak. The poultry
industry in India has lost 1,100 cores.

While India grapples with the novel COVID-19 on an international and local level, the
economy seems to face a setback as large as the toll on health. While the costs are
definitive, Asian Development Bank predicts a cost between $387 million and $29.9
billion in personal consumption losses to the Indian economy.

34
 Stock Market
Moody's cuts India growth projection to 5.4 per cent for 2020

Ratings agency Moody's on Monday slashed its 2020 growth projection for India to 5.4%
from 6.6% forecast earlier on the back of slower recovery, citing largely domestic factors
and cautioning that global economy will be adversely impacted by the novel coronavirus
(Covid-19) outbreak.

It also revised downward the GDP growth forecast for China to 5.2% in 2020, warning
severe downside risks to the global economy if the coronavirus grows to pandemic
proportions. India is forecast to grow 5.8% in 2021 against 6.7% estimated earlier, while
China is pegged slightly lower at 5.7% in 2021.

The country's market halved position limits for certain stock futures, restricted short-
selling of index derivatives and raised margin rates for some shares in a bid to curb
"abnormally high" volatility.

India’s aiming for 100 gig watts of operational solar power capacity by 2022. However,
China accounts for nearly 80% of the solar cells and modules imported to the country –
and COVID-19 means that many of those imports have now been put on hold.

Below are the comparison of the Market price during COVID.

35
Macquarie is finding value in select pockets of the market even as Indian equities remain
in a bear market. India’s benchmark indices are trading more than 30% off their record
highs, as investors are concerned about the economic damage of the lockdown. However,
the brokerage has picked out 10 stocks using a bottom-up approach.

Here are some 10 stocks which are performing quite well in current scenario.

GAIL INDIA
CIPLA
PETRONET LNG
HDFC BANK
HINDUSTAN UNILEVER
INFOSYS
ICICI BANK
HCL TECHNOLOGIES
ULTRATECH CEMENT
DR REDDY’S
LABORATORIES

36
GAIL INDIA

 Share price building in extreme pessimism

 Stock is trading around 50% below fundamental bear case valuation
 Macro is tough but LNG contract flexibility under-appreciated

CIPLA

 Steady growth visibility, recalibrated capital allocation and attractive valuations

are key positives. 

 Expect Cipla to resume niche US launches in next few weeks

 Being well-positioned to monetize its respiratory portfolio in developed markets
is a structural opportunity

PETRONET LNG

 See short sharp volume recovery post lockdown

 Stock trades below fundamental bear case fair value, providing ample margin of
safety
 Continue to see Petron

HDFC BANK

 Even in bear case, if 12% loan growth post Covid-19 for FY21 is assumed, stock
still offers 30% upside
 There will be job losses due to Covid-19 but willingness of customers to repay
money is good.

37
HINDUSTAN UNILEVER

 Home care can benefit in the near term due to stockpiling

 See long-term positive trends in personal wash and packaged/nutrition foods
 GSK merger provides strong Platform to grow foods portfolio, would be EPS
accretive from FY21

INFOSYS

 Successful execution of new CEO’s strategy has led to faster organic growth rate
versus industry
 Even with single-digit revenue fall in FY21, EPS decline would be less than 10%
 Company has strong net cash balance sheet and 4.7% dividend yield

ICICI BANK

 Stock offers 50% upside even after factoring 8.5% loan growth for FY21 in bear
case scenario
 Expect delinquencies in retail portfolio to be contained
 Lower portion of business banking portfolio versus peers would keep credit costs
in check

HCL TECHNOLOGIESNSE

 HCL has low exposure to BFSI and diversified business mix

 Strong net cash balance sheet provides support

ULTRATECH CEMENT

 Stock warrants sustainable premium due to 20% plus market share, diversified
presence, strong brand and distribution network
 Estimate net debt to fall to $1.1 billion as operating cash flow improves

38
DR REDDY’S LABORATORIES

 Expect double digit earnings growth over FY21-FY22 even without big ticket US
launches
 See medium-term growth momentum in Europe staying strong

Once you understand the market cycle and are convinced to take advantage out of the
crash, then there are two important questions to address:

How to invest? & what to invest? Let’s Understand 1st how to invest?

How to invest?

Handling Duration Blindness:

One of the most difficult problems an investor faces in handling black swan type crisis is
duration blindness. Since there is no precedence of such an event, it is difficult to
estimate the time the crisis will last for. The investor can use various estimates from
experts but make room for the errors in forecasting too. It is extremely rare to catch the
exact low of the market while investing.

Hence it is better to stagger the investment over a significant period of time. Selection of
this time frame is subjective. However, it is better to keep a longer duration so as to
accommodate a margin of safety in terms of timing too.

What to invest in: Handling portfolio selection?

During a market crash, the frothy valuation gets almost eliminated and sub-standard
businesses are penalized heavily. The investor is in given an opportunity to choose from a
wide variety of businesses that have come to attractive levels. To create a robust
portfolio, one must follow some basic principles:

39
Principles are as follows:

 Stay within the circle of competence: Typically, in these markets, investors run
a screener to check which stocks have corrected the most in the fall. Being
anchored at the 52-week high or all-time high prices, one is tempted to dive into
businesses that one may not have tracked earlier. Not knowing what you are
buying (irrespective of valuation) makes you vulnerable to losses. Stay within the
stock universe that you understand well.
 Avoid companies with high financial leverage: Leveraged companies can often
run into liquidity troubles. These businesses have to survive the downturn to make
money for the investor.
Also, in an environment where quality companies are available at attractive
valuations, there needs to be very high payoff to move into riskier stocks. Unless,
the earnings trajectory is fairly visible, dabbling with high debt companies can be
avoided.
 Buy robust business model, cash rich, high ROCE companies: During a bull
market, even companies with fragile businesses or weak balance sheets or
negative cash flow profiles are able to raise money based on a concept or an idea.
A lot of zombie companies continue to survive due to easy money conditions.
After a crash, investors who have burnt their fingers in such stocks will shift to
companies that have a robust growth-oriented business model, good management
and strong balance sheet. Healthy cash flows and ROCE are a mark of a good
business. Scalability, brand franchise and good leadership are other important
characteristics to choose a company.
To sum up, Black Swan events are unexpected, high impact events. Investors can
take advantage of these events by understanding the fundamental and behavior of
a market crash. However, it is important to a) Be humble and stagger the
investments over a reasonable time frame and b) be meticulous in picking up
good quality businesses.

40
 CONCLUSION

As per the above research we can conclude that economies will be suffering through the
crisis as per the current situation especially China, Japan & prominently the Italy. So
certain measures are needed to be taken to prevent economy from suffering from huge
financial losses. Also, human beings are going through a lot of problems, so precaution
needs to be taken prescribed by WHO and maintaining personal hygiene is very
important to vanish off such disease.

Economies play very crucial role in developing their countries so balancing economy
along with mankind is very important. Now every economy is going through a lot as
these situations will impact the whole world for long time medically as well as
financially. So even while investing in crisis situation it is important to study each &
every possible information available to us also the current situation which is most
important on which basis, we can make our decision of investment.

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 RECOMMENDATION

I would recommend that as per the research conducted current situation may put you in
loss if we will deal with china or if we are dependent on china for any Material, Deals
etc.

Also, while investing in any stock it is important to study the current situation and do as
currently investing in any stock would be risky.

SCOPE FOR FURTHER STUDY

In this research further scope to study can be conducted of various other economies who
are also suffering during covid. Economies can be selected using other criteria like No of
Death rate, Low medical facilities etc. We can study by dividing data can studying it for
single economy.

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 LIST OF REFERENCES

https://www.who.int/health-topics/coronavirus

http://www.indianjournals.com/ijor.aspx?target=ijor:ijrss&volume=6&issue=7&article=0
54

https://www.cnbc.com/2020/03/11/coronavirus-latest-updates.html

https://time.com/5799586/italy-coronavirus-outbreak

https://www.business-standard.com/article/international/coronavirus-mcdonald-s-to-
toyota-companies-fear-for-business-in-china-120020100157_1.html

https://economictimes.indiatimes.com/news/economy/indicators/moodys-cuts-india-
growth-projection-to-5-4-per-cent-for-2020/articleshow/74171366.cms?from=mdr

https://www.cnbc.com/2020/02/24/italy-stocks-plummet-as-coronavirus-prompts-
shutdown.html

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