Tom Arran Tom Arran, Friday 28th February 2020, 10:22 AM CET
Financial Impacts Coronavirus, Crypto Lending Markets

It’s been a prolonged period since we’ve had a global health emergency, seeing a rate of infection faster than SARS. The Coronavirus is causing for countless industries to be toppled, with financial markets on the worldwide scale seeing immediate declines in stock valuations. This has drastically applied to the Chinese Stock Market, which has seen such an impact that the Renminbi has fallen. Investors and traders in China aren’t the only ones being affected, with London and Germany having their respective currencies fall in valuation as well. These declines follow after increasing concerns amongst investors regarding this health emergency.

Financial analysts are questioning why a global healthy emergency is influencing financial markets. It’s prompted multiple outfits to contact experts in psychological fields, hoping that their assistance will inform them how to return financial markets to standard valuations. The Keystone Wealth Partners Group provided public context towards the potential reasoning behind this immediate decline in stock valuations. They stated: “Our brain, though incredibly complex, has one primary task. And that task is to keep us alive. Our brain does this by making sure we avoid threats. We all exhibit what has been called a ‘negativity bias.'”

Those statements continued with: “We are wired to feel the pain of loss to a greater extent than we feel the pleasure of gain. In other words, losses hurt worse and for longer than gains feel good. We avoid losses to greater extents than we pursue gains. Even the thought of a potential loss activates the pain centres in our brains.”

Japanese Yen

Primarily, it’s being noted that during global emergencies, traders don’t invest with rational behaviour. They are more likely to select investment opportunities that feel safe and familiar, such as Gold or Silver. It’d explain why there was an influx of terminated investments with Chines and Asian stocks. However, this is now being seen on the worldwide financial stage.

Client Acquisition Volumes Unaffected

Financial analysts anticipated that the Coronavirus would prompt an immediate decline in acquired clients. It was presumed that these potential clients would be unwilling to contribute to a fluctuating market. This hasn’t remotely been the case though, with the Coronavirus barely damaging the rate of consumer acquisition. There have even been cases where select brokerages have received an influx of client registrations, with the most excessive coming from RoboForex.

The Chief Managing Officer at RoboForex, Dennis Golomedov, spoke with reporters regarding their client engagement. He stated: “Any emergencies, including major problems in health care, surely affect different aspects of human life and financial markets are no exception. Nowadays, we see how the new Chinese Coronavirus influences the quotes of public companies, which are in one way or another involved in international business.”

Dennis’s remarks continued with: “The commodity sector is experiencing a huge pressure right now. It’s a potent factor that greatly impacts the global economy, and any changes offer a lot of different opportunities for investing and trading. As for changes relating to client engagement, we don’t see any declines here. On the contrary, what we see is the growth in active clients and the number of new registrations. Our clients are very actively trading, and the portfolio of traded instruments has significantly increased over the past year. The same is observed in the volume of traded instruments.”

Another international forex brokerage that hasn’t seen any impact of client registrations is Skilling. Throughout the last two weeks, they’ve experienced a minor influx of registered consumers, with this being the result of a consistent marketing campaign throughout the European Union. Skilling emphasis that their rate of client acquisition isn’t related to the Coronavirus.

The Total Financial Impact

The level of the impact seen with the Coronavirus for financial markets will most likely be minimal. Multiple brokerages have revealed that their operations aren’t being affected by the Coronavirus, which includes ATFX. Jeffrey Sui from the ATFX Group spoke on their recent activities on the worldwide scale. He said: “We have not seen any material changes in the number of new clients signing up for our services across the world. As a globally established company with 13 offices worldwide, our business spans numerous markets, which provides us with a global balance of clients both in the retail or institutional spheres, limiting our overall exposure to any single region.”

Jeffrey’s remarks continued with: “Currently, we do not have the complete picture of how the Coronavirus will affect our business, given that we are still in the traditionally low season. We’re closely monitoring the situation and will have the actual figures by Q2. Also, we would like to remind our clients to pay close attention to their investments during this uncertain period.”

Market Analysts for FXGate provided their insight on the financial market’s coronavirus impact. They stated: “For versatile FX traders, abandoning trading due to the outbreak of the Coronavirus is not the best idea, but, oppositely, traders tend to take advantage of the fears in markets by finding out the most profitable assets. Safe havens should offer a good opportunity at times of panic, yet the U.S. dollar and cryptocurrencies are currently the best performers.”

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Tom Arran

Author: Tom Arran

Tom has over 10 years experience on crypto currencies, first mining bitcoin on an old university computer for 20 cents a coin to now day trading bitcoin in between helping to start whichbroker.com. Tom has previously held roles at a leading EU brokerage and provided insight and consultancy work for number of UK banks in Crypto. Tom Arran can be contacted at [email protected], View all posts by Tom Arran

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