There are plenty of reasons why you shouldn't panic sell during the latest coronavirus ASX share market selloff.
Investors seem to be getting more cautious again. The global economic damage may be worse than first expected. But I think there are still lots of things to be positive about.
4 reasons not to panic sell despite the latest coronavirus selloff
Australia is doing comparatively well
Compared to other western countries, Australia has done well to keep the infection numbers so low. The less human pain there has been the quicker the entire country can get back to a more normal life. Countries like the US are still in the thick of it.
The quicker Australia is safe enough to open up again, the quicker a lot of businesses will be able to get back to making profit. Some retail shares like Adairs Ltd (ASX: ADH) have managed to maintain good sales through the online offering, but stores opening again would be even better.
China's economy is already recovering
There's no doubt that Australia is quite dependent on Chinese demand for a number of industries like resources, agriculture, infant formula and education.
China seems to be in control of the coronavirus better than most other major economies. A quick return to a normal China economy is good news for shares like Rio Tinto Limited (ASX: RIO).
Record central bank support
Share prices will follow earnings over the longer-term. But share prices are also affected by things like central banks.
Central banks around the world have put a large amount of extra liquidity into the economy system. They have also lowered interest rates to very low levels. The lower the interest rate the higher the share price should be, all things being equal.
History of the share market
No-one can know what's going to happen next with the share market. Every share market crash is caused by different reasons, this one is particularly different from any other.
After each market crash there has been an eventual recovery like we saw after the GFC. Even if it takes a while.
Foolish takeaway
I think we can be positive about the long-term future of the share market, particularly as the virus seems to be under control in Australia. There's a lot of economic pain to come, but there are a few reasons why the share market may not get as bad as the GFC.
