Financial markets around the world have been rocked as an exodus of foreign workers from China intensified fears over the impact of the coronavirus on the world’s second largest economy.
Major global companies have begun pulling staff from the province of Hubei at the hear of the outbreak or imposed travel restrictions on staff across Asia, telling any workers who visited the region to stay at home.
Global shares slid despite the Chinese authorities stepping up their response, with more than 2,700 cases and 81 deaths confirmed.
The FTSE 100 closed down by more than 2%, or 174 points, at 7,412 and other European markets sustained heavy losses as concerns increased over China’s economy as it attempts to bounce back from its long-running trade conflict with the US.
Shares dropped on Wall Street and the Dow Jones Industrial Average fell by about 400 points, tumbling from record high levels recorded earlier this year.
What is the virus causing illness in Wuhan?
It is a member of the coronavirus family that has never been encountered before. Like other coronaviruses, it has come from animals, or possibly seafood. New and troubling viruses usually originate in animal hosts. Ebola and flu are examples.
What other coronaviruses have there been?
Severe acute respiratory syndrome (Sars) and Middle Eastern respiratory syndrome (Mers) are both caused by coronaviruses that came from animals.
What are the symptoms of the Wuhan coronavirus?
The virus causes pneumonia. Those who have fallen ill are reported to suffer coughs, fever and breathing difficulties. In severe cases there can be organ failure. As this is viral pneumonia, antibiotics are of no use. The antiviral drugs we have against flu will not work. If people are admitted to hospital, they may get support for their lungs and other organs as well as fluids. Recovery will depend on the strength of their immune system. Many of those who have died are known to have been already in poor health.
Is the virus being transmitted from one person to another?
Human to human transmission has been confirmed by China’s national health commission. As of January 30, the death toll in China stands at 170, with 7,711 confirmed cases of infections. In the past week, the number of confirmed infections has more than tripled and cases have been found in 13 provinces, as well as the municipalities of Beijing, Shanghai, Chongqing and Tianjin. The virus has also been confirmed outside China, in Hong Kong, Macau, Japan, Nepal, Singapore, South Korea, Taiwan, Thailand, the US, and Vietnam. There have not been any confirmed cases in the UK at present, with the more than 70 people tested for the virus all proving negative. The actual number to have contracted the virus could be far higher as people with mild symptoms may not have been detected. Modelling by WHO experts at Imperial College London suggests there could be as many as 100,000 cases, with uncertainty putting the margins between 30,000 and 200,000.
How worried are the experts?
There were fears that the coronavirus might spread more widely during the week-long lunar new year holidays, which start on 24 January, when millions of Chinese travel home to celebrate, but the festivities have largely been cancelled and Wuhan and other Chinese cities are in lockdown.
At what point should you go to the doctor if you have a cough, say?
Unless you have recently travelled to China or been in contact with someone infected with the virus, then you should treat any cough or cold symptoms as normal. The NHS advises that there is generally no need to visit a doctor for a cough unless it is persistent or you are having other symptoms such as chest pain, difficulty breathing or you feel very unwell.
Should we panic?
No. The spread of the virus outside China is worrying but not an unexpected development. It increases the likelihood that the World Health Organization will declare the outbreak to be a public health emergency of international concern on Thursday evening. The key concerns are how transmissible this new coronavirus is between people and what proportion become severely ill and end up in hospital.
Sarah Boseley Health editor and Hannah Devlin
The French automotive group Peugeot said it was working to evacuate 38 international employees and their families from Hubei, where it has three production sites. Other companies, including the banking firm Standard Chartered, imposed travel bans to the city of Wuhan. Goldman Sachs, the US investment bank, also restricted travel, while HSBC said it was closely monitoring the situation for the safety of its employees.
In a signal of the impact on international business, Credit Suisse, the Swiss bank, sent staff in Hong Kong a memo telling them to work from home and not to travel to its headquarters in the city if they had visited the mainland in the last 14 days. According to the Financial Times, the bank is also offering temperature checks at its main office.
Standard Chartered, which is based in London but makes most of its profits and has most of its staff in Asia, is reducing face-to-face working in China and Hong Kong alongside its travel restrictions. It is also offering training on disinfecting and deep-cleansing buildings, teaching staff to recognise symptoms, and providing masks and hand sanitisers.
Luxury goods makers with significant sales in China and Asia plunged on financial markets across Europe, including Burberry and LVMH. Such firms would usually stand to benefit from a rise in sales from the lunar new year celebrations last Saturday.
Airlines and hotel groups, which could face losses because of travel bans, came under heavy selling pressure, while mining firms that have benefited from China’s manufacturing boom in recent years also fell in value.
Anglo American and Glencore also suffered, while the price of a barrel of oil fell by around 3% to below $60 amid concerns that the outbreak could exacerbate an economic slowdown in China and the rest of the world.
Joshua Mahony, a senior market analyst at the financial trading group IG, said: “The further this virus spreads, the worse it will be for Chinese economic output. We are also seeing commodity stocks slump, with the prospect of a decline in Chinese growth hurting expectations of demand in the sector.”
Safe-haven assets such as gold and government bonds jumped. Chinese financial markets were closed for the lunar new year, while Bloomberg reported that stock markets in the country could remain closed until at least next Monday as Beijing grapples with the worsening crisis.
Comparisons with the 2003 Sars outbreak have highlighted the potential for a prolonged process that could damage economic growth.
After the Sars outbreak, China’s annual GDP growth fell to 9.1% in the second quarter of 2003 from 11.1% in the previous three-month period, as the government imposed travel restrictions. However, GDP growth recovered to 10% in the second half of 2003.
This time around, the Chinese economy is much larger and more connected to the global economy. However, analysts said the government response to the coronavirus outbreak appeared to be tougher and more transparent, which could help limit the impact.
Mark Williams, chief Asia economist at the consultancy Capital Economics, said Chinese GDP growth would be significantly damaged by the outbreak. Rail passenger numbers on Saturday, the first day of the lunar new year, were 42% lower than on the equivalent day in 2019 and road passengers 25% lower. The declines in May 2003, the peak month of the Sars outbreak, were 57% and 45% respectively.
“Even if the coronavirus outbreak is brought under control quicker than Sars was in 2003, the economic impact now looks likely to be of at least a similar scale,” he said.
