Coronavirus Death Toll Higher Than SARS

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Coronavirus Spread Intensifying

The outbreak of the coronavirus has quickly become the main focus this year and has had a visible impact on markets. The virus began in Wuhan, China just over three weeks ago.

It quickly spread around all 31 provinces in China before spreading across Asia and finally making it as far as mainland Europe, the UK, and the US.

As of this week, the latest reported figures show that over 360 people have died in China alone as a result of the infection, with over 17,000 confirmed cases.

The death toll from the virus has now risen to 20%. Over the weekend, the first death outside of China was confirmed in the Philippines.

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Death Toll Now Higher Than SARS Outbreak

175 cases have been confirmed globally, outside of China, spread across more than 25 countries.

Worryingly, the spread of the infection has been intensifying and the current death toll is higher than the 2003 outbreak of SARS, which killed 249 people.

With SARS having taken around 3 – 4 months to get under control, there is a growing fear that the infection will claim far more lives than the 800 lost globally during the SARS outbreak.

Along with the cost to human life, SARS also hit the global economy, particularly in China and Asia.

Economic Impact in China

In China, the retail sector took the main hit, falling from 10% to under 5%.

The lockdown meant fewer people were out spending money in shops and markets. We can expect a similar fall this time also.

However, it will be interesting to note how much of the decline will be offset by online purchases that have ballooned since the SARS outbreak.

The service sector stands to take the bigger hit this time around. It has grown from around 40% of GDP to over 50% of GDP.

The middle class in China has also grown considerably since the last time around. So, the lockdown means that spending among this group will be heavily reduced.

The consumer sector in China is already on the back foot due to the recent surge in food prices as a result of African swine fever which fuelled upward pressure in food prices. Regionally, the lockdown means that the Hubei province is likely to see a big hit to activity.

With the province accounting for 4% of the total China GDP, a 10% decline could account for a 0.4% drop in national GDP. A deeper drop such as 20% could wipe as much as 0.8% off the total GDP figure.

Global Economic Impact

In terms of the global impact of the economic hit to China, the damage could be much worse. At the time of the SARS outbreak, China accounted for around 9% of the global economy. Today, that figure is just shy of 20%.

In terms of global growth, China drove around 20% in 2003 and is now responsible for over a third.

Market Impact

Equities markets have been sharply lower in response to the outbreak with the SPX500 falling from highs of around 3337 to the current 3240s. This decline looks set to continue given that the spread of the infection is still gathering pace.

Commodities have been under pressure also. Crude oil is dropping sharply in response to the ongoing outbreak. It has now slipped by around 14$ and looks set to continue lower.

During the SARS outbreak of 2003, global oil demand was knocked heavily lower as activity slowed. With the virus currently displaying a greater trajectory than SARS, there is plenty of room for further downside in crude prices.

Technical Perspective


The outbreak is taking a heavy toll on CNH which is falling steadily against USD. The PBoC cut its reverse repo rate this week. However, most players anticipate the bank will be forced to take further action.

USDCNH has now broken back above the key psychological level of 7 and is testing the broken long term bullish trend line. If price makes it back above the trend line, a rally up to the 7.1390 level looks feasible.

To the downside, any fallback should find support into the 6.8982 level though for now, focus is on a further push higher.


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