Coronavirus Will Be Worse Than SARS. So What?
That is a very low bar to clear
Editor’s note: Still not clear why we should be more concerned about this virus than about hundreds of others. The only thing corona has so far shown is that an enormous number of people take perverse pleasure in scaring themselves silly. Asians, who love horror flicks, probably even more than others.
The novel coronavirus that spread out of Wuhan and is infecting nearly 10,000 people since it was first discovered in early December will have higher case numbers and maybe higher death tolls than the SARS crisis of 2003. But what does that even mean?
SARS was another type of coronavirus, a respiratory viral infection similar to pneumonia that spread out of China starting in November 2002 and ended in July 2003. No one has had SARS since 2004. Some 775 people died out of nearly 8,000 people infected over an 8 month period.
Today, the novel coronavirus has infected at least 9,776 people, with 213 deaths, almost all of them (204) from the Hubei province, home to the city of Wuhan. [By now there have been 259 deaths and 12,000 confirmed cases.] It is spreading at alarming rates, but the coronavirus is like a severe cold. Most people do not die of severe colds. Most of the deaths in China have been among the elderly population. [213 deaths in 9776 infections would indicate a very lethal virus but it is entirely possible tens of thousands of cases went undetected as they did not make the infected person particularly sick.]
For sure, the coronavirus will infect over 10,000 by tomorrow, and death tolls are likely to rise by another dozen.
The World Health Organization called the outbreak a global health emergency on Thursday, but did not blame weak China controls. They said that it warranted being called a global public health emergency in order to get the WHO to take over, play a larger role in countries that are not taking the same evasive measures as China.
The virus continues to spread at the same amount per day, roughly 1,500 new cases. [Ie there has been no exponential expansion we were being scared with.]
China’s stock market is closed because of the holiday, but keep in mind that the recent sell off in the A-shares — stocks listed on the Shanghai and Shenzhen exchanges — means that China’s stock market will fall on Monday when they get back to work after the Lunar New Year Holiday, just to satisfy all of the sell orders that have come out of the West. Unless the local Chinese can prop up the market on Monday, China will be in the red (or green, because in China red is up and green is down).
On Friday, the U.S. opted to go against WHO’s recommendation on travel restrictions and told Americans not to fly to China. Singapore is closing travel with China. No one from mainland China is allowed there, the South China Morning Post reported this morning.
Travel restrictions are seen having a negative impact on China, and on specific companies in the short term, especially travel-related companies. But public health, here, is more important than GDP and airline stocks.
Russia and Mongolia have sealed their border with China. Russia reported its first case of the virus today.
“We don’t know how many people have the virus,” says Charles Robertson, global chief economist from Renaissance Capital. “Two to three days ago the official estimate was 4,000. The figure is now over 8,000. Some scientists are saying it is probably already 100,000. [If it is 100,000 then the 259 deaths is a very low number.] If this doubles every week – the whole world could have had the chance to get this within 14 or 18 weeks.”
SARS lasted 8 months. A 14 week outbreak is just over three months. If China is containing the disease as well as the WHO says it is, then border closures and travel restrictions should keep this in check. That doesn’t mean the reported cases won’t expand over the next several weeks, but if death tolls remain under SARS level, and if global cases only drip in, rather than explode, this could be over sooner than people were expecting earlier in the week.
Economic damage will be reassessed over time, with Barclays Capital expecting at least a 0.2 percentage point reduction in China’s first quarter GDP. A government economist quoted by Caixin Global on Wednesday said he wouldn’t be shocked if GDP growth falls below 5% in the first quarter as the outbreak hit during China’s busiest holiday seasons.
Worth noting, it is flu season in the U.S. The average number of deaths is between 23,000 and 61,000, according to the Center for Disease Control. Between 280,000-810,000 are hospitalized, meaning there were nearly 1 million flu cases reported.
This current pathogen is largely unknown, unlike influenza. Some have said it stems from a re-engineered bat virus that escaped a Wuhan microbiology lab.
The quick spread of novel coronavirus could lead to more deaths in a shorter period of time. The fast response to this could lead to the end of the outbreak faster than SARS.
China’s A-shares opened lower on Friday, with the XTrackers CSI-300 China A-Shares ETF (ASHR) down 1.17% at the opening bell.
Apparently the worst point for markets during an epidemic tends to come when it makes the cover of The Economist, says Daniel Salter, equity strategist for Renaissance Capital.
Guess what’s on the front cover of tomorrow’s international edition? Yes – earth covered in a China dust musk. The novel coronavirus is the new SARS, the new Ebola pandemic scare. If past imitates the future, this scare will be over soon.
This week, the U.S. Health and Human Services Secretary, Alex Azar, reiterated to the press that viruses are “unpredictable” and that the U.S. was doing what it could to stop the spreading of the disease.