The Covid-19 coronavirus is wreaking havoc across global markets as the impact of the virus on travel, supply chains, manufacturing, and sales are starting to hit home.
In mid-February Apple said it would not meet is quarterly revenue target because of lower global iPhone supply and lower demand for its products in China.
The following week, Mastercard said that cross-border travel, and to a lesser extent cross-border ecommerce growth, is being impacted by the coronavirus.
Two days later, Microsoft warned investors that its first-quarter sales would be lower than expected because of supply chain issues.
It is, however, not isolated to global tech giants. Fear surrounding the Covid-19 coronavirus outbreak is so significant that the US market experienced its worst loss since the 2008 financial crisis.
South African tech stocks getting killed
Stocks in emerging markets are also suffering because of the outbreak, which is aggravated by the growth in the number of coronavirus cases outside of China.
While the JSE was also influenced by Finance Minister Tito Mboweni’s 2020 budget, bad company results and a possible Moody’s downgrade, the impact of the coronavirus is clearly visible.
The JSE All Share Index fell from over 57,000 to around 51,000 over the past week – by far lowest level it has seen this year.
South African tech stocks formed part of the sell-off, but investor fears related to the coronavirus is only part of the story.
EOH, for example, is battling to gain investor confidence after corruption revelations which saw its share price decline 76% this year.
Another example is Adapt IT. Its share price plummeted after a poor trading update which showed that the company was struggling to cope in tough trading conditions.
The graphs below show how prominent JSE-listed ICT companies performed so far this year (2020 year to date).