Italian stocks on Monday suffered their biggest two-day drop in nearly a year and a half, as investors were worried about the impact of COVID-19 on the country’s economy.
The blue-chip index on the Italian Stock Exchange fell 5.4 percent on Monday, following a drop of 4.3 percent on Friday, marking the biggest two-day decline since October 2018.
The back-to-back drops at least temporarily sliced more than 50 billion euros (54 billion U.S. dollars) off the market capitalizations of companies listed on the exchange.
Not a single share on the Milan-based Borsa Italiana exchange gained value during Monday’s trading session.
“There are lots of uncertainty in the market right now, and that is scaring people,” Riccardo Puglisi, an economist and commentator with the University of Pavia, told Xinhua, adding that the novel coronavirus is expected to have a negative impact on the country’s economic growth in the first quarter of 2020.
The epidemic has already taken its toll on Italy’s tourism sector, one of the country’s most reliable economic drivers. Italy’s tourism association Federturismo on Monday called on the Italian government to aid the sector’s operators.
Italy on Monday reported seven deaths caused by novel coronavirus infection and more than 220 confirmed cases of the disease, most of which occurred in the economically vibrant and industrialized northern part of the country.
In response to the crisis, local authorities have locked down 10 towns in the northern region of Lombardy and one in the northeastern region of Veneto.
The Italian government have also issued bans, closing several gathering spots and prohibiting people from entering or leaving the affected areas.
Several economic measures have been taken in the virus-hit regions, including suspending tax and mortgage payments and asking workers to stay home.
“At this point, it’s impossible to estimate the final impacts of the coronavirus with any accuracy,” said Alessandro Missale, a political economist at the State University of Milan.
Puglisi said the next two weeks would likely determine how severe the economic impact will ultimately be.
“The key will be to watch whether we have a V-shaped recovery, where everything sinks and then goes back up quickly, or a U-shaped recovery, which would take much longer,” Puglisi said.
“With a V-shaped recovery, production falls, but then it picks up again and can almost compensate for what was lost. That’s the best we can hope for,” Puglisi added.