Taking stocks of Year 2020

Year 2020 has been a year of frightful year. Following the fruitful ending for year 2019, most of us were hopeful that the prosperity would follow through into year 2020. Just the opposite. It was nightmarish not long after the Chinese New Year (CNY), which took place in the last week of January 2020. The fear about the uncontrollable spread of the unknown coronavirus was gaining momentum each passing day. The speed of the stock index descent took us quite off-guard. The STI went into a tailspin within one to two weeks after the CNY as the spread of the virus became quite unstoppable. With no idea of how this virus came about, let alone finding a cure and finding ways to contain it, the stock avalanche then became distinctively imminent. Between mid-February to around end-March, it had been unidirectional…. down, down, down. The total descend was 1,000 points on the STI in a month. At the trough of the descend in the last week of March 2020, the STI was down about 30% from the beginning of the year.

Any fund manager or anyone who holds a reasonably significant portfolio of stocks will tell you, this is the most fearful type of scenario. There is no escape route so long as we hold some stocks. Many veteran players’ immediately action was “just sell first and talk about them later”. I bet before we can get back to our senses, we found that the STI was already 30% down. In particular, many investors who have been diligently accumulating stocks over the last few years, suddenly saw their portfolio decimated significantly within a month.

On the whole, the stock market movement had been quite depressing for next 6 months that followed. Corporates started to cut dividends to conserve cash. REITs offered rental rebates to retain tenants. Retail malls became ghost towns. Countries started closing out against foreigners. Airlines and the hospitality counters were hit badly. Oil as well as its related industries tanked as the aviation and travel industries came to a grinding halt. The list went on.

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