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Economic implications of a SARS/Coronavirus outbreak

greggles

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I've always thought that when the end comes for humankind on this planet, it will be a highly contagious deadly virus that wipes us out. It will be nature's way of getting rid of what is throwing the balance of nature out.

With the world's population continuing to increase at a rate of knots, and hygiene and disease prevention at consistently low levels in the third and developing worlds, I think these kind of outbreaks will only increase in frequency.

Assuming that the current Wuhan and other upcoming outbreaks don't wipe us out, one of the questions raised by these incidents is the impact they can have on the global economy. The rate at which the infections can spread is staggering, with cases already being reported in a number of countries where infected Chinese nationals who were in the vicinity of Wuhan at the time of the outbreak have travelled. The true extent of the outbreak is something we cannot be sure of, nor how far and wide it may spread before it is eventually contained.

What should our response be as investors when outbreaks like this occur? The impact has the potential to be far more profound and long lasting than other market moving black swan events such at the September 11 terrorist attacks and the 2008 GFC. If China's economy is crippled by an outbreak that cannot be easily contained, the consequences could be devastating globally.

Personally, I don't trust the Chinese government to be upfront and honest about what is really happening inside its borders. Their priority is going to be to quell panic and maintain order. Truth may well fall by the wayside as a result.

When I think long and hard about the possible consequences, it can get pretty scary. Is it unreasonable to think that imports out of and exports into China could be suspended if it is unable to be contained quickly enough? Tourism, retail sales, travel and industrial production could be hit very hard as confidence plummets.

400 million people in China are expected to travel across the country this weekend to celebrate the lunar new year. The timing of this current outbreak is especially bad.

The 2003 SARS outbreak in China cost the world economy $40 billion. A total of 8,098 were infected and 774 killed in 37 different countries. Wuhan has a population of 11 million. What if 250,000 people are infected? 500,000? A million?

With Australia's economy on shaky ground already, what will a difficult to contain SARS virus outbreak have on our economy? If China sneezes, we get a cold. Well, China is sneezing at the moment, literally. The question is, how big is that economic sneeze going to be?
 
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I've always thought that when the end comes for humankind on this planet, it will be a highly contagious deadly virus that wipes us out. It will be nature's way of getting rid of what is throwing the balance of nature out...
I thought it wasn't in the interest of a virus to wipe out the host. A virus can only multiply in a cell, so it's not in its interest to kill off all people. I remember but can't source an article about the inverse relationship between severity of the outbreak and its longevity. Also, populations that form colonies of closely related individuals (bees, ants, also rats, bats, humans) are more susceptible to transmission. That and incubation times.

One factor playing with coronavirus is that symptoms don't manifest for 10-12 days. With modern transportation on a global scale, containment becomes much harder. The Chunyun (Lunar New Year) migration of more than 2 billion passenger movements in the 15 day period coming up would be looming high in the PRC response.
 
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I would expect airlines to be adversely affected if the outbreaks continue as well as tourism, hotels, casino , cinemas and shopping centres, ie places where people congregate..

Internet marketers would benefit as people desert the stores even more.

Medical providers, makers of face masks etc would benefit especially if one came up with a cure or vaccine.
 

greggles

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One factor playing with coronavirus is that symptoms don't manifest for 10-12 days. With modern transportation on a global scale, containment becomes much harder. The Chunyun (Lunar New Year) migration of more than 2 billion passenger movements in the 15 day period coming up would be looming high in the PRC response.
The CCP cannot possibly control the movements of billions of people completely. It would be hard enough to do so even here in Australia with a population many magnitudes smaller. The incubation period you mentioned is a great worry. Are infected people with normal body temperatures slipping through the containment choke points? We cannot possibly know now, but we will.... soon.

If things get significantly worse, I'd be betting on another spike in the gold price.
 

greggles

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Conditions appear to be deteriorating in mainland China. 35 million people are now quarantined. Flights and trains into and out of Wuhan are suspended, and public transport within the city has been stopped.

China has reported over 1,280 norovirus cases with the death toll currently at 41. I think that these numbers likely do not reflect the current situation and are probably based on old information.

Australia announced its first case today, a Chinese male in his 50s who returned from China last week.

Japan, Singapore, South Korea, Taiwan, Hong Kong, Thailand, United States, Vietnam, and France all have confirmed coronavirus cases.

Residents of Wuhan are reporting that it feels like "doomsday" in the city, with infected patients roaming from hospital to hospital unable to find medical treatment.

https://www.news.com.au/world/asia/...d/news-story/772a92d238a629edd2d239626f76fca4
 
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I would expect airlines to be adversely affected if the outbreaks continue as well as tourism, hotels, casino , cinemas and shopping centres, ie places where people congregate.
I note the fall in the price of oil which could plausibly be related to traders expecting a drop in aviation and tourism generally.

Could be other factors at work too but I wouldn’t rule out the idea that someone (institutional investors) have already taken some action due to this issue.
 
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In terms of the spread of the virus, an issue is just how easily one can travel around the world these days.

Even places which have no direct flights to China and are physically an island or in the middle of nowhere are still only one flight away from somewhere that does have flights to China.

Eg Broken Hill or Tasmania are both physically isolated by distance and being remote or an island. Ultimately though well it’s only a matter of boarding one plane to Melbourne or Sydney and then another one to China and you’re there within a day. That there’s no direct service is only a minor barrier in practice.

Nowhere is really protected by means of distance or physical isolation these days in practice.
 
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Ahhh... Y2K ? Or Bird flu ? Or is it terrorists ?

Fear fear and more fear.

Relevance of this flu ? Or likely ? NOT much.

Ohh I forgot

Ebola ... maybe that is spreading ?

I want to shake the PM's hand in case I already have it !!
2020
1st week : potential ww3
2nd week : australia bush fire
3rd week : volcanoes erupting. one is a former super volcano. still about to erupt.
4th week: corona virus
.... can't wait for next week
 
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It is scary. I'm thinking of a city of 11 M people in effective quarantine. And then another 24 M people also quarantined. The potential for social unrest seems skyhigh.

It is already spreading around the world. They still don't know how virulent it is ie percentage of deaths and how contagious. And of course there is the risk of further mutation.

In these circumstances I think all stock markets are, well and truly, fully priced.

Why is this any worse than normal influenza?

We don’t yet know how dangerous the new coronavirus is – and we won’t know until more data comes in. Twenty-six deaths out of 800 reported cases would mean a 3% mortality rate. However, this is likely to be a overestimate since there may be a far larger pool of people who have been infected by the virus but who have not suffered severe enough symptoms to attend hospital and so have not been counted in the data. For comparison, seasonal flu typically has a mortality rate below 1% and is thought to cause about 400,000 deaths each year globally.

Another key unknown, of which scientists should get a clearer idea in the coming weeks, is how contagious the coronavirus is. A crucial difference is that unlike flu, there is no vaccine for the new coronavirus, which means it is more difficult for vulnerable members of the population – elderly people or those with existing respiratory or immune problems – to protect themselves. One sensible step to get the flu vaccine, which will reduce the burden on health services if the outbreak turns into a wider epidemic.

https://www.theguardian.com/science/2020/jan/24/what-is-the-coronavirus-wuhan-china-virus-symptoms
 
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The msm is massively underreporting this, they are taking ccp figures as being true. Positive news from china=>discount, negative news from china=>multiply.
 
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Just thinking about the rapidly changing figures on people and countries affected.

I wonder how the stock markets will open after the weekend ? Could be some serious selling/shorting activity if this continues to deteriorate in the next 36 hours.
 
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I thought it wasn't in the interest of a virus to wipe out the host. A virus can only multiply in a cell, so it's not in its interest to kill off all people.
An 'interest' implies rational thought and, in the case of squillions of independent entities, an over-riding control of those entities which doesn't exist. A virus, like all living entities just exists to live and reproduce. Sometimes, they reach an equilibrium with the host, or in great cases, form a symbiosis, but in this case, like measles and smallpox, they just keep on multiplying and only leave hosts alive by chance, not design. A host naturally resistant will survive and mean the virus will flourish as well, but those infected who are not immune will fall, probably taking the virus with it. Interestingly a virus is really easy to kill - one on a dry surface will die pretty much immediately. It's bacteria you've really got to be proud of in the "survive for ever in super harsh environments then come out and kill everybody" stakes all animals play with the rest of the pathological world.
 
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Just thinking about the rapidly changing figures on people and countries affected.

I wonder how the stock markets will open after the weekend ? Could be some serious selling/shorting activity if this continues to deteriorate in the next 36 hours.
Just my 2:2twocents I think the markets will get hammered next week. Volatility is ready to break out to the upside and most major markets are already extended. A lot of companies reporting next week and if there are any negative surprises it will magnify the sell off conversely earnings beats will nullify to an extent the selling pressure.
 
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Just my 2:2twocents I think the markets will get hammered next week. Volatility is ready to break out to the upside and most major markets are already extended.
Most markets are extended as you say and "due" for correction.

Add in tensions in the Middle East

Add in that things look to be getting more serious with Trump

Now this virus

If the markets don't take a fall then that would almost be getting suspicious..... :cautious:
 
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