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3 ASX 200 shares to hedge against the coronavirus crash

There are a lot of ASX 200 shares crashing lower right now as fears over the coronavirus pandemic reach our shores. The S&P/ASX 200 Index (ASX: XJO) is now down 25.22% since the start of March, but it’s not all doom and gloom.

It’s true that many sectors will be hit hard by the pandemic. We’re already seeing that with the Aussie airlines, as well as other businesses in the travel and hospitality sectors. I think we’ll see the knock-on effects hit secondary sectors in the week ahead. If you’re trying to find a way to hedge your risk in these times, here are 3 ASX 200 shares that I think could be worth a look.

3 defensive ASX 200 shares 

Picking just which industries this pandemic will hit hard is difficult. On top of that, being in a bear market makes ASX 200 share valuations even more difficult to determine. However, I think it pays to think about how shares might perform in both the present and the future.

In terms of the present, the ASX supermarket shares look to be a clear standout. Yes, there has been significant panic buying from retailers like Woolworths Group Ltd (ASX: WOW). But buying into Woolworths shares based on this short-term sales spike may not be too successful for a buy and hold strategy. However, it looks like supermarkets will remain open based on what we’ve seen overseas. I think Woolworths could be a good ASX 200 share to buy given the strong earnings tailwinds and non-cyclical nature of the company’s operations. 

Somewhere between the present and the future is Medibank Private Ltd (ASX: MPL). Australia’s second-largest health insurance provider will surely be seeing a jump in enquiries right now. Now, it’s too hard to pick just how this pandemic will impact Aussie health insurers. It could be the case that the number of claims jumps and hits the insurers hard. However, I still think Medibank could be one of those ASX 200 shares to buy as a hedge.

Medibank is a big company and I think there is some implicit support from the government. While the short-term impact on earnings is uncertain, I think we could see a spike in private health insurance take-up once the pandemic has passed.

One other indirect outcome may be a spike in business investment. Once this current storm has passed, I suspect businesses will seek to be more agile and that could mean beefing up their data security and off-site data management. That puts NEXTDC Ltd (ASX: NXT) in the frame for significant expansion in my view. As a result, I think the Aussie data centre operator is one of those few ASX 200 shares that could provide a hedge against the pandemic right now.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.

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