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Impact of Novel Coronavirus on Financial Performance and Policy Options (No. 18, 2020)

2020-03-17

By Wu Zhenyu, Zhu Hongming, Zhu Junsheng & Wang Gang, Research Team on “Impact of and Response to Novel Coronavirus Disease”, DRC

Research Report, No. 18, 2020 (Total 5762) 2020-2-24

Abstract: Novel coronavirus disease has exerted an impact on financial performance through multiple channels and in three stages from predicted shock, entity contagion to policy digestion. The influence of novel coronavirus on financial performance is basically controllable, but we must be aware of its structural impact on regions and industries as well as its duplicate effect on existing risks. With regard to the periodic, structural and duplicate features of the virus, we need to contain the financial risks induced by the virus in a systematic manner, monitor the fluctuations in stock and bond markets, and be on guard against the scenario in which stock, bonds and foreign exchanges would face duplicate risks along with the existing ones. In formulating the current hedging financial policies, we need to take into account their roles in different stages, and allow quantitative tools to play a bigger role so that relevant policy measures could fade out gradually in the future. Structural tools are also preferred to make policy-making more precise. And regional policies also need to be in place in order to improve efficiency and cut down on costs in implementing these policies.

Key words: novel coronavirus pneumonia, financial risks, response