Since the coronavirus outbreak has come into the picture, the markets started crimping globally and the effect can be witnessed worldwide. According to a high-end executive official at Mubadala Investment Co., commodities markets are set to “fizzle” as the coronavirus crimps business worldwide.
Fall in the commodity prices is posing a risk for the emerging economies of the globe that depend on these markets for the production of raw materials. Deputy Chief Executive Officer Waleed Al Mokarrab Al Muhairi, Mubadala advised investors to “be a little bit cautious,” on Tuesday in Abu Dhabi. He further added that the unpredictable perspective for the coronavirus makes it difficult for the investors to decide where to invest their capital. The infection is weakening economic growth as airlines are terminating flights to China, the origin country of coronavirus. As a result, factories have to look somewhere else for components which they used to buy from China. The upswing in demand for oil was already weak amid a supply surfeit, plus benchmark Brent crude has plunged 18% this year.
Al Muhairi said, “Commodities are going to be impacted. You see that in aluminium, you see that in iron ore, you see that in oil.”He explained that Middle Eastern oil producers are required to amplify their efforts to make their economies diverse and ready for a time when sales of crude will generate limited revenue.
As the coronavirus infection has already brought a considerable loss in the global marketplace, Al Muhairi concludes by the view that the investors should prefer aiming countries that provide a diversity of industries and don’t rely entirely on the outcome of raw materials.