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There could be more coronavirus ASX pain to come

There has already been a lot of ASX companies that have warned about the effects that the coronavirus is having on their businesses.

For example, Blackmores Limited (ASX: BKL) has warned that its operations are being affected by the shutdown in China.

Cochlear Limited (ASX: COH) has said there have been a large amount of surgery cancellations in China.

Altium Limited (ASX: ALU) has warned that it’s likely to be at the low end of its FY20 guidance because of the coronavirus effects in China.

Resources giant BHP Group Ltd (ASX: BHP) has warned that if the coronavirus continues to the end of March then its FY20 result will be impacted.

So, when will the coronavirus stop being a problem?

There is certainly no end in sight in the near term. China is still reporting that the confirmed number of cases is rising by a few thousand each day with daily deaths numbering more than 100. Thankfully, there hasn’t been any widespread infections in any other country yet, as bad as it is for China. 

Most people think that we are at least several weeks away from the outbreak being resolved.

It would be a mistake to think that the coronavirus would lead to permanent decline in the value of companies, but I don’t think many investors are actually acknowledging the damage that the world’s second largest economy shutting down for an extended period of time could do to share prices in the shorter-term if the lockdown continues.   

Australia is closely linked to China because of the amount of exporting that Australia does to China. The resources, the education, the tourism, the baby products and so on. There are lot of industries that rely on Chinese demand. 

There’s always something to worry about with shares. I’m not worried about the long-term for the share market. I haven’t sold a single share and I’m eyeing up my next investment choices, but I think there are some shares that are heavily linked to China that may yet prove to be disappointing in the short-term. That’s why I wouldn’t be looking to buy shares like BHP for quite a while, if it were on my watchlist.

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Tristan Harrison owns shares of Altium. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. The Motley Fool Australia owns shares of and has recommended Blackmores Limited. The Motley Fool Australia owns shares of Altium. The Motley Fool Australia has recommended Cochlear Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.