The head of Swiss watchmaker Swatch said he expects a post-coronavirus pickup in business even as the company is now taking a “massive” hit from the outbreak as sales in its key Chinese market have plummeted.
“Given our very strong market position in China, of course we are massively hit by the temporary closing of hundreds of stores,” Swatch CEO Nick Hayek told Swiss newspaper SonntagsZeitung on Sunday.
Swatch is one of many global brands—alongside McDonald’s, Disney, and Starbucks—to have shuttered many of its China-based operations in response to the fast-spreading virus.
As the number of infections has grown and economic damage due to closures and supply chain disruption has intensified, stock markets have been rocked by a wave of wild swings. The VIX, a volatility index known as Wall Street’s fear barometer, spiked last week to levels not seen since the 2008 financial crisis.
Hayek told SonntagsZeitung that his company’s debt-free balance sheet served to insulate it from extreme market swings.
“We are a basically solid group without debt and not infected by the virus of stock market short-termism,” he said. “This situation as well will get better despite all the prophets of doom.”
‘Narratives Often Drive Overreactions’
An increasing number of people were asked to stay home from work, schools were closed, large gatherings and sports and music events were canceled, stores were cleared of basic goods like toiletries and water, and face masks became a common sight.
The outpouring of bad news has caused people to overlook bright spots in the economy, says Robert Johnson, professor of finance at Creighton University. As an example, he cited last week’s U.S. jobs report that he said was widely disregarded, despite it being what he called “a grand slam home run of a jobs report.”
“Investors fear a pandemic and dismiss the blowout job reports as meaningless,” he told The Epoch Times in an emailed statement. “In the absence of coronavirus, the market would likely have treated these numbers with a dramatic rise in prices.”
“Narratives often drive overreactions on both the up and downside,” Johnson said.
The February jobs report not only beat expectations by 98,000 jobs, but previous months’ numbers were revised upward. January payrolls were revised upward by 48,000 jobs, and December payrolls were revised upward by 37,000 jobs.
“Some are suggesting that with the coronavirus, this report was a non-event, calling it the least important jobs number in a long time. While it may be true that the jobs report isn’t stopping the current stock market slide, had the jobs report been negative the market would surely be falling more precipitously,” Johnson said.
“What this jobs report shows is that pre-coronavirus, the US economy was on a very solid foundation. This should give investors some solace that the US economy is in a strong position to withstand this black swan event.”
The outbreak has killed thousands of people and spread across more than 90 nations, with six countries reporting their first cases on March 6.
In the United States, 19 people have died and nearly half of all states have reported cases of the new coronavirus, which causes the disease COVID-19.
Reuters contributed to this report.