Beyond Rising Deaths, Wuhan Coronavirus Already Hits China, US, Global Economies

The most recent coronavirus outbreak that originated in Wuhan in the Hubei province of China has become more deadly and is much less contained than global health officials would have hoped. The death toll has risen to over 40 out of a most recent report of more than 1,300 who have caught the virus. With Wuhan and surrounding cities closed off, there are already rippling effects being felt. The United States has organized a charter flight removal for U.S. citizens who are in Wuhan, a city of about 11 million people that is a major transportation hub inside China, and other nations are pursuing the same strategy.

The loss of life and suffering from illness is always the worst part of any outbreaks, epidemics and pandemics. There is also an economic case that has to be considered in a global economy where a virus moves from one nation to others and begins to shut down parts of local economies and when it begins impacting other nations.

One issue which is going to complicate the impact of the rapid spreading of coronavirus outbreak in China is that the timing of the wider spreading virus was at the start of Chinese New Year, which coincidentally happens to be the Year of the Rat. The Lunar New Year was already expected to close much of China for the week ahead. Now the coronavirus has already hurt public events and ceremonies, with many events having just been cancelled. China has even temporarily closed some 70,000 movie theaters to help curb the spread of the coronavirus.

Before considering how outbreaks turn into epidemics and then into pandemics, the newest coronavirus outbreak is far from the first such case in the modern era. There have been multiple Ebola scares in the last few years alone coming out of Africa. A cholera outbreak in Yemen, swine flu in India, and other outbreaks have been far more deadly as of this time. There have also been multiple others such as swine flue and avian flu that have been great concerns and which have been devastating to animal populations. And SARS, which was reported to be less than 1,000 deaths back in 2003, was perhaps the most memorable of the outbreaks in Asia as one of the first modern era global scares.

There is no simple way to try to minimize or discount deadly viruses and other outbreaks. One issue of relevance to consider is that there are thousands of deaths per year in the United States alone that come from each flu season that are tied to influenza and pneumonia that occur. The U.S. Centers for Disease Control and Prevention (CDC) has already estimated that the 2019/20 flu season has seen 15 million to 21 million cases of the flu through just January 18, 2020 — with 140,000 to 250,000 hospitalizations and an estimate of 8,200 to 20,000 flu-related deaths. As with most illnesses, the mortality rates are generally much higher among those who are infants, the elderly, those with cardiopulmonary conditions and those with compromised immune systems.

China has halted almost all public transit in and out of Wuhan and the surrounding areas in an effort to contain the coronavirus from spreading even more than it has. On top of the isolated cases in the United States, confirmed cases have also been reported in Vietnam, Thailand, Nepal, South Korea, Japan, Singapore, France, Australia, Taiwan and in the territories of Hong Kong and Macau.

At this stage, it may seem too soon and too difficult to try to calculate the economic impact in China, the U.S. and globally. Most pandemic scares and other geopolitical scares usually come with only short-term economic and market impacts. What is not impossible to see right now is that there has already been billions and billions of lost market capitalization rates in dollars among just some of the the top Chinese companies listed in America and in the value of U.S. companies which have direct exposure to Wuhan and other closures or curtailing of operations around China.

General Motors Co. (NYSE: GM) has a large manufacturing facility in Wuhan, as do other global auto-makers. With a 1.6% loss to $34.31 on Friday, GM lost about $750 million in market cap. Anheuser-Busch InBev SA (NYSE: BUD) has a large brewing facility in Wuhan, which was its first in China. The ADSs of AB/InBev fell 0.66% to $77.74 on Friday for a loss of close to $1 billion in market capitalization. Other U.S. and Western businesses are halting their or curtailing their operations locally or around China.

The Walt Disney Company (NYSE: DIS) announced that it was closing its Disneyland and Disneytown parks in Shanghai. Its shares slid 1.5% to $140.08 on Friday, and while that’s not the end of a run it is a loss of $3.8 billion in market capitalization. That also represents the lowest closing price going back to last November before its shares jumped from about $138.00 to $to $147.00.

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