It’s hard to see the positives with the coronavirus having reached almost 80 countries and notched up death toll of more than 3,000.
But investors are a strange bunch, inoculating themselves from emotions and training themselves to look for investment opportunities during hard times.
Investment sage Warren Buffet’s quote to “be fearful when others are greedy and greedy when others are fearful,” typifies this approach.
Many investors who saw the sea of red in global stocks last week have already rushed back in to buy at what they predict will be a bargain price.
As well as the many companies warning about the negative effects of the outbreak, some businesses have also been flagging where they have been beneficiaries.
Profits from Covid-19
At the front-line of the outbreak, the need for testing capabilities led to benefits for Novacyt PLC (LON:NCYT), which makes the Primedesign diagnostic test.
The AIM-listed company reported “unprecedented interest” in its coronavirus test, with 33,000 tests already ordered and requests for quotations from over 30 countries in three weeks since it launched the diagnostic at the start of February.
This week the beneficial results of the butterfly effect were being seen at a considerable distance from the virus frontline, with mobile telecoms software specialist Boku (LON:BOKU) saying it had enjoyed a strong start to the year partly due to the spread of the coronavirus.
Boku, which provides the technology to mobile networks and apps stores that allows people to buy products and services just by adding the cost to their phone bill, said payment volumes in the first two months of the year rose by 30% year-on-year, which was a slightly larger increase than expected.
“The recent growth we have seen in those countries that are most affected has been higher than in those where the virus has had a more limited impact so far,” said chief executive Jon Prideaux.
Similarly, with consumers looking to avoid crowds, at the end of last week, Ocado Group PLC (LON:OCDO) said it was experiencing “exceptionally high demand”, suggesting customers are stocking up due to coronavirus fears.
“More people than usual seem to be placing particularly large orders,” the online grocer said. “As a result, delivery slots are selling out quicker than expected.”
While the retailer did not mention the coronavirus outbreak in its email, many saw it as a sign that the UK general public is stockpiling in case the situation gets worse.
Neil Wilson at Markets.com also suggested Just Eat Takeaway.com (LON:JET) and Domino’s Pizza Group (LON:DOM) could benefit for similar reasons: “Anyone who has to stay at home will be relying on Just Eat and Domino's to keep them fed. Two weeks of takeaway might make you less healthy than if you'd just gone out though...”
“Self-isolation is also really fostering change in corporate thinking about remote working, tech etc so I think Zoom, which is doing great anyway, will be a big winner,” says Wilson, adding that Netflix is just going to be “a staple” whether or not people are leaving their homes.
“The problem with any of these is that the unwind could be nasty if you've bought expecting a global catastrophe and it doesn't materialise then these stocks could retreat quickly.”
It's a tricky task for investors looking to try and profit from coronavirus, says Russ Mould, investment director at AJ Bell but if the best means of containing and beating the virus is isolation and staying at home, then he agrees that "anything that occupies people at home and keeps them fed and watered has to be a start".
"If you find the right biotech that would help but it won’t be easy to do, alas. On a relative basis you would expect providers of consumer staples - utilities, food producers, grocers - to do better than consumer discretionary plays (retailers with weak online presence, cinemas, travel and airline plays)."
Consumer goods giant Reckitt has reported seeing “increased demand” for cleaning products such as Dettol and Lysol amid a surge in hygiene consciousness among consumers and with health authorities recommend extra handwashing as a result of the outbreak.
The ‘Protector Health & Hygiene’ brand gloves, made with Symphony’s d2p technology, were launched two years ago as the first in planned range of antimicrobial disposable healthcare products, including face masks, surgical gowns, isolation gowns and hospital waste bags.
Last week the company also saw its shares nearly triple in value after the US regulator approved the company’s d2p antimicrobial food packaging.
Iodine producer Iofina PLC’s (LON:IOF) potential role fighting in the outbreak was flagged this week by major shareholder Arron Banks, who highlighted iodine's use as a disinfectant that he expected to see greater demand during the coronavirus crisis.
The coronavirus trade
After the FTSE 100 lost 11.1% last week and the Dow Jones more than 12%, traders and financial spread betters have been enjoying the increased volatility, as they do.
CMC Markets (LON:CMCX) confirmed on Tuesday that there has been a significant uptick in trading activity on the back of the recently explosive financial markets.
The CFD broker said volumes had already been good since the start of 2020, but the recent market slump due to coronavirus fears has heightened trading activity.
For longer-term investors, now is a good time to invest, fund manager Zehrid Osmani, manager of Martin Currie Global Portfolio Trust (LON:MNP), told Proactive.
“When there’s fear and increased uncertainty in the market, which is what shorter-term investors focus on, we find there’s a great opportunity provided the long-term situation hasn’t changed,” he said.
“As far as the coronavirus is concerned, the long-term nature hasn’t changed, though yes, Q1 and Q2 is going to be pretty brutal.”
But he predicted the abnormal shock was going to potentially led to a period of synchronised policy response from central banks and governments around the world.
“For short-term investors who want to focus on Q1 the risk is that you’re going to miss out on a potentially sizeable recovery in the market on the positive impact of monetary and fiscal policy responses.”