What is a coronavirus?
The World Health Organisation (WHO) was made aware earlier this month that people from Wuhan City in the Hubei Province of China had contracted a new type of virus that has never been seen in humans before. It has similar symptoms to pneumonia and predominantly causes respiratory problems. This new virus is part of the family of coronaviruses that include everyday illnesses like the common cold and more serious viruses like SARS and MERS. It has temporarily been named ‘2019-nCoV’.
Several coronaviruses are known to exist in animals but not humans, and this latest outbreak is thought to be caused by 2019-nCoV being transmitted from an animal to a human at a wet market in Wuhan. This has happened before, with SARS having been transmitted by civet cats while MERS came from camels.
There is not currently a vaccine or treatment available, although governments around the world are racing to find one. One major problem of this new virus is that the symptoms do not appear to become apparent straight away – meaning people can carry the virus without knowing for as long as two weeks before symptoms start to show. This makes it harder to identify people that have been infected, making it easier for it to spread.
Where has the coronavirus spread?
Once a human has been infected, they can then go on to infect other humans they come into contact with – which has allowed the virus to spread quickly. China has effectively locked down and quarantined the city of Wuhan after discovering the virus originated there, with all public transport brought to a halt. Around 11 million people live in the city, making it roughly the same size as London. Authorities have also extended the Chinese New Year holiday in the hope this will minimise travel and help contain the virus from spreading further.
Cases of the new virus have been recorded in almost every Chinese province. There has been nearly 3000 confirmed cases and thousands more of suspected ones, according to Chinese health officials. So far, the virus has been fatal for at least 81 people in the country, mostly older people and those that have pre-existing respiratory problems.
Most other countries have imposed strict travel rules for people trying to enter the country from Wuhan or other severely affected regions – but this has not stopped the virus spreading across the world. Neighbouring Asian nations including Japan, Taiwan, Thailand, Vietnam, Singapore and South Korea have all reported confirmed cases, as have those further afield like Australia, the US, Canada and France. The UK is yet to find anyone with the virus but has been examining many suspected cases, with some health officials warning that the virus is already likely to be in the UK and possibly spreading without anyone’s knowledge.
How is the coronavirus impacting stock markets?
The outbreak has certainly impacted financial markets. The question at the moment is how pronounced it will be and whether it is temporary or something that will weigh on markets for a prolonged period. WHO has not yet declared the new virus as a global emergency, which has provided some assurance, but nobody knows how the outbreak will develop or the chances of it petering out.
Suspected cases of a new virus were first known on 31 December 2019, but the new virus was not confirmed by WHO until 7 January 2020. Since the start of the year, the Shanghai Stock Exchange has lost over 3.5% while the Hang Seng Index in Hong Kong has shed over 2%. The Chinese yuan has also lost value. Below is a chart of the China A50, which is comprised of major stocks from the Shanghai and Shenzhen stock exchanges, that demonstrates how markets have weakened as the virus – and fears this could be the beginning of a much wider health scare – continues to gain momentum:
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January 28, 2020 at 09:55AM
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How is the coronavirus impacting financial markets? - IG
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