Wuhan virus: Upcoming market factors

Excerpts from OCBC report

TommyXie Analyst: Tommy Xie 谢栋铭, FRM
Vice President, Head of Greater China Research
Global Treasury Research & Strategy | Global Treasury | OCBC Bank

What’s next?

Market has priced in the first wave of negative headline with the USDCNH stabilized in the past two trading days.

According to Dr. Sonia Lupien, the director of the Centre for Studies on Human Stress, a stressful situation usually contains one or more of the following characteristics including Novelty (something new), Unpredictability, Threat to the Ego (the competence is questioned) and Sense of control (little or no control).

Although we have gone through many rounds of disease outbreak in the past two decades such as SARS, MERS, Ebola and Zika etc, market still feels stressful due to unpredictability and sense of control as Wuhan coronavirus shows different pattern of infecting human as compared to its cousins.

The outlook of the market sentiment may largely depend on the headline news in the coming days.

The next one week till 8 February will be critical in our view as the 14-day incubation period will expire gradually counting from the Wuhan city lockdown from 23 January.

Next 1 week

“The next one week till 8 February will be critical in our view as the 14-day incubation period will expire gradually counting from the Wuhan city lockdown from 23 January."

-- Tommy Xie

A million-dollar question

The most sought-after question about the Wuhan coronavirus is when the peak of the outbreak will come.

There are two schools of thought.

The optimistic view is that the peak may be early February which means the city lockdown works while the pessimistic view is that the peak may not come until April or May based on SARS model.

As most of investors have no expertise to detect when the peak will come, the only thing we should focus is the change of number of cases outside Hubei province, changes of number of suspected cases and number of people under observation.

Precaution is needed

I have been tracking the development closely during the Chinese New Year holiday including some individual cases.

Some of the individual cases reported in the past few days are worrying, which suggest the virus is very contagious although its impact on human body is milder as compared to SARS and MERS based on the current findings.

	Case study
28 Jan	Silent spreader: It was reported by Anyang city of Henan province that a young lady who returned from Wuhan on 10 January with no symptom as of now may have passed the coronavirus to five of her close family members who have no travel history to Wuhan.
28 Jan	Cluster outside Asia: Four German employees of the same company was confirmed after their colleague from Shanghai visited the offices.
29 Jan	Younger and younger: A 8-month old infant was confirmed in Anhui province. More than 9 children aged below 10-years old have been confirmed so far.

The existence of silent spreader may complicate the situation and potentially lead to more disruption in global travel and business.

Wuhan virus: Upcoming market factors

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