Capital Group video transcript: “Coronavirus: Investing in a global economy on pause”

Matt Miller: Now in the midst of all of this, we've got the news of the Wuhan coronavirus hitting. How do you take that into account as you think about portfolios? How have you been evaluating the risks there?

Jody Jonsson: I think the market has been fairly benign in its view of the coronavirus. But now, as it's spreading more broadly beyond China, the market is taking it a lot more seriously. And you've seen stocks of travel-related companies, luxury goods manufacturers — they're all starting to get hit quite hard. Sometimes that provides an opportunity, but I think the bond market is also telling you that this is going to have a more lasting economic impact and possibly cause certain countries to tip into recession.

Looks that way in Japan, China — certainly the growth rate has slowed down — possibly Europe, U.S. We really don't know yet. 

So I am thinking about it in a slightly changed economic environment. We're just seeing a number of areas where activity grinds to a halt while this is going on. 

Matt Miller: Have you made changes in your own portfolio as a result of what's been going on? 

Jody Jonsson: I haven't made a lot of changes. But there are a number of things I've been interested in where I've decided to wait and just see how this plays out, whether it might be luxury goods companies or travel-related industries. It just feels like we have a bit of time to see how widespread this becomes. 

Matt Miller: What does this outbreak mean for investing in China, either directly through Chinese companies like Alibaba or Tencent or indirectly, as we do through companies that are highly exposed to China's economy?

Jody Jonsson: It's interesting. I think in some ways, the impact is greater on some companies outside of China — obviously airlines, cruise companies. You know, there are a lot of companies that are affected by this that aren't Chinese companies. But it is helping a number of companies, particularly online commerce, e-gaming. You know, people are staying home and doing more things at home. 

Matt Miller: OK. 

Jody Jonsson: So consumption of entertainment, online shopping, etc. There are ways to capitalize on the opportunity.

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