March 5, 2020 / 11:06 AM / 4 months ago

U.S. stocks may fall another 11% due to virus damage-index provider MSCI

FILE PHOTO: The MSCI logo is seen in this June 20, 2017 illustration photo. REUTERS/Thomas White/Illustration

LONDON (Reuters) - U.S. stocks could be in line for another double-digit decline in the near-term because of damage from the spread of coronavirus, index provider MSCI said on Thursday, citing its scenario-based analysis,

“We’ve conducted a what-if scenario analysis that assumes a short-term drop in growth of 2 percentage points and a risk-premium increase of 2 percentage points,” Thomas Verbraken, executive director at MSCI’s risk management solutions research told clients.

“Our model indicates that, in such a scenario, there’s room for further short-term losses: U.S. equities — already down 11% from Feb. 19 through March 3 — could drop a further 11%.”

Verbraken said that if the global economy suffered only short-term pain, the market could bounce back. However, a hit to long-term growth trajectory which would also impact corporate earnings due to the pandemic could be felt over a much longer horizon.

Reporting by Karin Strohecker; editing by Sujata Rao

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