Observations on the Market Crash in 2020 (On-going post)

Intially, people think that the corvid-19 spread will be contained in China and Asia.

One day, it spread to South Korea via a church in South Korea. Weeks later, Italy have suddently a lot of cases. The spread then went into other European countries and US.

US and European market started to drop.

Seperately, one day, Saudi Arabia and Russia could not agree on oil cuts and the market are flooded with oil. Oil prices dropped rapidly from $55 to $30. And this lead to further drops in market.

Then we saw rallies of 8%-10% in a single day in US market. But the market continue to drop.

In Singapore, the banks dropped first, down 10%, down 20% ... Needless to say, the travel-related shares like SIA, SATs, China Aviation oil also fell heavily.

Then the reits started to fall too and then the decline become more rapid. Cromwell Reit -- reit of Eurporean properties -- fell by 16% in a day, as Europe are affected by the virus.

Globally, there are expectations for airlines to go bankrupt if Govt does not support the airlines. This is due to nobody travelling around. Italy has nationalised their airline.

20 Mar 2020: Asian market rose, as US markets rose in previous day. Some reits rose up by more than 10%. E.g. Cromwell reit rose by 37% in a day; quite crazy. Anyway, the US market dropped 4% later on 20 Mar. Asia market is likely to drop again on Monday 23 Mar.

23 Mar 2020: Asian market dropped. STI dropped 7.4%. iEdge S-Reit INdex dropped 7.7% similarly.

26 Mar 2020 (Thurs): STI has rose for 2 consecuetive days (Tue and Wed) before sliding a bit today. Compared to Monday's 2,231, STI is 11% higher at 2,484. Govt has also announced Resilence Package of $48 billion with support for land transport and aviation industries. Stocks like SIA and SATS are safe given the support from the package.

28 Mar 2020 (Sat): US indices fell 3-4% on Fri, as US covid 19 cases rises and exceed China's. Likely to see STI fall on Mon. Saw a podcast by Josh Brown mentioning that for the market to recover, we should see Italy covid 19 cases to drop and then US covid 19 cases to drop.

2 Apr 2020 (Thu), am: The US market rose on 30 Mar (Mon) but fell on Tue and Wed (1 Apr). People have attribute the rising US market last week and on 30 Mar to non-economic factors such as end of quarter rebalancing.

Howard Marks has an interesting memo "Which way now?" (dated 31 Mar 2020), and he noted:

Nevertheless, the market prices of assets have responded to the events and outlook (in a very micro sense, I feel last week’s bounce reflected too much optimism, but that’s me).  I would say assets were priced fairly on Friday for the optimistic case but didn’t give enough scope for the possibility of worsening news.  Thus my reaction to all the above is to expect asset prices to decline.  You may or may not feel there’s still time to increase defensiveness ahead of potentially negative developments.  But the most important thing is to be ready to respond to and take advantage of declines.

27 Apr 2020 (Mon): The market has slight decline last week. The highlight of last week is that oil price has reach negative $30+ as the futures expire and buyers need to find storage for oil causing negative prices.