All this week the stock exchanges have been feverish. Investors are panicking in the face of a new strain of the coronavirus, selling stocks and securities.
On Wednesday night, the stock exchanges had just started to recover from the “unfortunate” news related to omicron, as the report of the discovery of the first person in San Francisco infected with the new strain in America caused investors to have a new panic attack. In the last 15-20 minutes of yesterday’s trading stocks of many companies after some stabilization and even growth collapsed again by 1-3%.
One can, of course, argue a lot about the losses of investors, who hoped for the reassuring messages of the authorities that fears regarding Omikron may be greatly exaggerated, and did not have time to fix profits, but on the other hand, the collapses of recent days created a classic situation, familiar to anyone who is at least slightly familiar with investments and operations in the securities exchanges.
Whenever a collapse or correction like the one that happened this week presents an opportunity to buy significantly cheaper stock.
JPMorgan Chase & Co (JPM) analysts, for example, believe now is an opportunity.
Their recommendation is based on early Omicron research suggesting with cautious optimism that the new strain is not as terrible as it seemed in the early hours and days after its discovery.
Surely the new strain is more infectious than delta, the main variant of the Covid-19 coronavirus in recent months, which humanity has so far been fighting without much success.
However, current research by scientists suggests that it is more contagious, but less dangerous than delta. Incidentally, the weakening of viruses is fully consistent with the evolutionary theory of their development and is supported by numerous examples from past epidemics.
JPM analysts Marko Kolanovic and Bram Kaplan wrote in a research note about these considerations and that now is the time to buy cheap stocks
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“Omicron could prove to be a catalyst not for a flattening but for a rise in the yield curve, a shift from growth to value, a move away from pandemic selling (of securities) and towards the start of a rally. We view the recent sell-off in this context and see it as a (good) buying opportunity…”
Omicron has indeed, as they say, made a lot of noise in recent days. So far, the number of countries where it has been detected has already exceeded two dozen and is increasing rapidly. Russia isn’t on the list yet, but it is clear that detecting omicron here as well is just a matter of time.
The authorities of many countries are trying to protect themselves from the new strain using proven methods: first of all, by closing borders and interrupting air traffic to the region where the contagion was discovered. In this case, about a dozen countries in southern Africa.
The medical profession is split, as usual, into two opposing camps: Some see omicron as deadly and sound the alarm, arguing that existing vaccines are virtually powerless against it; others, including Australia’s Chief Medical Officer, Paul Kelly, argue that it is no more dangerous than the existing Covid-19 mutations. At least, the optimists add, at this point scientists have no reason to claim otherwise.
Marko Kolanovic, JPM’s chief global markets strategist this year, is a cautious optimist, believing the markets have overreacted to the omicron threat. In his opinion, the situation with delta is repeating, when markets and investors also panicked when news of its discovery appeared.
JPMorgan forecasts oil to rise to $150 a barrel in 2023. Photo: Yandex Images
By the way, one can find in the history of medicine quite a few cases when viruses, though less dangerous and more contagious, quickly gained the upper hand over their more dangerous “congeners” and displaced them
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If that theory holds true for Omicron as well, JPM analysts say there is a real chance that the deadly coronavirus pandemic will soon turn into something akin to the familiar seasonal flu.
If this scenario were to play out”, write Kolanovic and Kaplan, “WHO needlessly jumped over just two letters when naming the new strain. It should have been called omega (the last letter of the Greek alphabet) straight away’.
Author: Sergey Manukov
