Thursday, June 25, 2009

Economic Impact Of H1N1 Should It Worsens

There is some genuine concern now over the H1N1 virus. Fact, this is nowhere as deadly as the H5N1 which ravaged HK and most of Asian economies. H5N1 has a mortality rate of 58%, while the newer strain is not as deadly. There is sufficient antiviral for the new strain unlike the scramble for H5N1. Experts predict that during a pandemic up to 30% of the global workforce could either be off work due to sickness or stay away due to fear. Absence levels at the expected rates would cause severe problems. The economic impact of H1N1 is more global tha H5N1. If conditions worsen, the impact will initially appear in two primary aspects of business. The first will be the availability of the workforce, the second and more unique impact will be in the market place.

Left unchecked, real estate values would be slashed, bankruptcies would soar and the insurance industry would be decimated. Naturally airlines would be one of the most directly impacted, followed by the tourism sector, in particular economies that are heavily dependent on tourism such as Australia, Thailand and HK.

Business are better prepared nowadays, especially in Asia. Many have planned for workers to work remotely from home where possible. More indoor time will naturally slow the flow of money and the service industry will be affected as well.

How the businesses will be affected will depend on how long the impact will last. If the fear conditions persists, we could see about 20%-50% of revenue for most companies being affected if high-alert persists for at least 6 months. During such an extended high-alert period, its best to stay cashed up, pay down all bills and reduce your leverage. Not a time to buy a property.

Hence property developers will be back to where they were 9 months ago if the high-alert conditions were to worsen further. The trade for livestock will again take on a highly protective shield.

What businesses can do is to have contingency plans: do you already have surgical masks at work for staff who may be coughing or seems to be slightly sick; do you have plans to get staff to work remotely from home to sustain the on-going critical services; do you have plans when only 50% of your staff is available; what about 30%; etc.

While the current strain is not as devastating, the entire issue could snowball into extreme fear and crushes confidence - not good for any economies at this juncture of recovery. We are not there yet, but one should know what precautions to take, and how to cash out properly and swiftly when things take a turn for the worse.

p/s photos: Kim Ah Joong


K H said...

Our Gov always not proactive one. Why now only give flu shots to front liners and give advise to people to quarantine themselves? Should have done all these couple of months ago.

KC said...

A really concern !
Esp for KLCI, a sentiment driven equity market & weak investor that panic sell everything when market facing uncertainty.

ronnie said...

The major benficiary of H1N1 is the rubber glove sector. The best glove company would be Adventa, the second largest surgery glove manufacturer in the world.

solomon said...

I think telecommunication counters like TM and Green Packet will benefit from this outbreak. Reason being more internet usage and teleconference.

Mall and restuarants will be direct hit as usual.

Gloves biz may flourish but it may have run ahead of its fundamental.

Sealand Blog said...

still dont see people wearing masks outside, cinemas are even more packed due to transformers 2

since never happend in KL before most people seems to take it easy?

Brad Zurich said...

The markets are range bound right now between 8000 - 8500 its a good trading range and investors and buy on dips and short on rise of the Dow Jones Industrial Average.

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Tony said...

Ah, you guys forgot to mention that the health care and wellness industries would benefit too.

see said...

It was reported 1 in 5 australians could be infected by the virus. No wonder most "imports" are from Oz

Born2Reign said...

Forget the shots. Normal flu kills 500,000 people each year. What does all govt do abt it? Zilch. If you follow reason, why focus on H1N1 which kills a few hundred?

Share prices of drug cos going up must be the objective for this massive fear PR job.

Most of those who died of SARS and H1N1 are old ppl and some kids who have low immune system. Vaccinations are just an introduction of the virus into your body directly but unfortunately bypassing the skin and mucus. Not wise.

Most ppl willing pay for insurance premiums every month to prepare for death, but spend almost nothing on nutrition and supplements to prevent diseases.

I should add that contaminated water kills 2,000,000 ppl worldwide, of which 1,000,000 are children. What are the govts doing abt this?

So get a proper perspective and stop reading the papers. H1N1 is not to be feared if you know what the powerful ppl DO NOT want you to know.

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