Coronavirus, now officially known as Covid-19, continues to wreak havoc, with the death toll risingto more than 2000 globally and the number of confirmed cases crossing the 75,000 mark. Globally, the coronavirus has spread to around 28 countries, with the maximum cases observed in Singapore, Japan, Hong Kong and South Korea. Also, around 545 cases outside Mainland China are linked to the Diamond Princess cruise ship that has been docked in Yokohama, Japan (read: Coronavirus Puts These Country ETFs on High Alert).
Leading companies have issued estimates of the virus’ impact on the global economy. Per Moody’s Analytics and Barclays, the coronavirus outbreak will dent global GDP by 0.3% in 2020. Meanwhile, analysts at Oxford Economics predict a 0.2% drop in the current year. A special briefing published by the global business research firm Dun & Bradstreet noted that the coronavirus outbreak could impact more than 5 million businesses globally. The data also states that about half (49%) of the companies, with subsidiaries operating in coronavirus-impacted regions in China, have headquarters in Hong Kong, whereas, 19% belong to the United States, 12% to Japan and 5% in Germany.
According to the latest reports, Japan’s economy shrunk1.6% in fourth-quarter 2019 for an annualized decline of 6.3%, triggering fears of a recession in the days to come. The third largest global economy has been further pushed to the brink of a slump by the coronavirus outbreak in China. Moreover, Apple Inc. (AAPL - Free Report) recently warned its investors of the impact of the deadly coronavirus outbreak on its business and has therefore, trimmed sales expectations for this quarter (read: Coronavirus to Hurt Apple Earnings: Time to Buy These ETFs?).
ETF Areas Staying Strong
Given the situation, let’s look at some ETF areas that investors can follow for a smooth sail in these turbulent times.
Real estate investment trusts (REITs) had a bullish run on the bourses in 2019. A dovish Fed can be cited as the main driving factor. When interest rate drops, mortgage rates fall, making real estate or refinancing mortgages more affordable. This, in turn, boosts real estate sales. These funds offer outsized yields and act as good investing options, when increased safe-haven trades keep yields at check. In view of this, investors can consider ETFs like JPMorgan BetaBuilders MSCI US REIT ETF BBRE, iShares Core U.S. REIT ETF USRT, Nuveen Short-Term REIT ETF NURE, Invesco S&P 500 Equal Weight Real Estate ETF (EWRE - Free Report) and Schwab U.S. REIT ETF (SCHH - Free Report) (read: What's Behind the Recent Rally in Real Estate ETFs?).
Precious Metal ETFs
Prices of precious metals like gold and silver flare up during chaotic market conditions. This enhances the appeal of iShares Silver Trust (SLV - Free Report) , Invesco DB Silver Fund (DBS - Free Report) , SPDR Gold Trust ETF (GLD - Free Report) , iShares Gold Trust (IAU - Free Report) and Aberdeen Standard Physical Palladium Shares ETF (PALL - Free Report) (read: Precious Metal ETFs & Stock Sizzling This Valentine's Day).
The sector is among the most stable for the long term, as its players are likely to offer decent returns, irrespective of market conditions. It is known for its non-cyclical nature and acts as a safe haven for investors during erratic stock-market conditions. In addition, utilities act as a defensive option to stay invested in more rewarding equity markets. Thus, investors can look at The Utilities Select Sector SPDR Fund (XLU - Free Report) , Vanguard Utilities ETF (VPU - Free Report) , iShares U.S. Utilities ETF (IDU - Free Report) and Fidelity MSCI Utilities Index ETF (FUTY - Free Report) (read: ETFs to Buy as Utilities Are Favored Amid Virus Scare).
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