Why are ASX 200 shares being hit so hard?
ASX 200 shares made it through the February earnings largely unscathed. There was certainly a mixed bag of results last month with the big banks and ASX tech shares under the microscope. However, the bigger story since then has been the spread of coronavirus or COVID-19 around the world.
The ASX 200 has entered a bear market which means valuations have fallen 20% or more from recent highs. A perfect storm of COVID-19’s disruption to the global economy combined with an oil war between the Saudi Arabia-led OPEC cartel and Russia has smashed global markets in recent weeks.
It’s hard to know what to do when markets start to turn against your investments. However, it’s best to keep calm and not be tempted to jump on the panic selling.
With that in mind, here are a couple of ASX 200 shares that I’m looking at investing in for some strong dividends and defensive qualities.
Where I’m looking to put my cash right now
I like to approach these sorts of investments with a top-down approach. The first thing I’m looking for is sectors that have some tailwinds behind them or structural protections.
One ASX 200 share that I do like the look of is Ramsay Health Care Limited (ASX: RHC), a private hospital owner and operator. People still need healthcare, even in a recession, and that’s good for Ramsay’s earnings.
There is the potential for Ramsay shares to be under pressure in the short-term due to COVID-19. If hospitals are overwhelmed or front-line workers fall ill, that could test out the business’ operational capabilities. However, on a medium-term outlook, I like the healthcare sector and Ramsay as an ASX 200 healthcare share.
The other group I’m looking at is Mirvac Group (ASX: MGR). This is more of a play to do with the recent RBA interest rate cut. While everyone is focusing on COVID-19, the RBA just cut rates to 0.50% and we could be going to 0.25% in April. That means cheaper borrowing which could fuel the residential real estate market in 2020.
Mirvac could be poised to cash in on that boom and I’d be watching the ASX 200 REIT’s shares throughout the year.
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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ramsay Health Care Limited. 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.