Discussion - The economic consequences of the 2019-nCoV epidemic

[Laidback Al]

Economic Consequence of a Large Scale Epidemic

There will be severe economic consequences for China from this epidemic. On Thursday, January 23, 2020, the closing price of CSI 300 index dropped 5.5 % from the January 14th high. The CSI 300 index is a cap-weighted index that replicates the largest 300 companies listed on the Shanghai and Shenzhen stock exchanges. We won’t know how much the index will drop as the number of cases increases because the Chinese stock exchanges are now closed for the Chinese New Year and will not reopen until January 31.

The S&P 500 Index fluctuated this week when two coronavirus cases were identified in the United States, with health sector stocks taking a big hit. When the stock markets open in the US on Monday, we will see how the large scale quarantines in China affect the US markets.

 

[Gert van der Hoek]

Some thoughts:

- stock markets are not the economy
- it is possible, or probable, there will be less sales, less consumption, less production
- that could be good news for the planet: less CO2 emissions.
- but what about loss of jobs and income?
- guess we will have to find out how to cope with a shrinking economy in the future, regardless of epidemics or pandemics.
- whether we want to or not, sooner or later we will have to deal with this, no escape, we are reaching the limits.
- probably we don't want to change, consume less, so we pretend there is nothing wrong, business as usual, the party will go on, as long as it lasts.

So: a decline in the economy could be a taster of future developments.

 

[Laidback Al]

Some thoughts:

- stock markets are not the economy
- it is possible, or probable, there will be less sales, less consumption, less production
- that could be good news for the planet: less CO2 emissions.
- but what about loss of jobs and income?
- guess we will have to find out how to cope with a shrinking economy in the future, regardless of epidemics or pandemics.
- whether we want to or not, sooner or later we will have to deal with this, no escape, we are reaching the limits.
- probably we don't want to change, consume less, so we pretend there is nothing wrong, business as usual, the party will go on, as long as it lasts.

So: a decline in the economy could be a taster of future developments.

Yes, you are correct, the stock market is not the economy. But years ago, I believe there was a thread started by gsgs about whether there were economic indicators in China that could be used as leading indicators of an impending epidemic/pandemic. At the time there were discussions of whether or not China was hiding outbreaks of infectious diseases from the rest of the world. The idea was that some economic numbers from within China might signal the severity of an outbreak. With the rapidity at which the Wuhan virus spread, China could not contain the news about the outbreak, but perhaps they may have been able if the rate of infection had been much lower.

Changes in the stock indexes in China can provide an insight into how disruptive this outbreak will be to the local economy. How many people will be sick and not show up for work? How will large scale transportation bans affect the movement of goods and service? Because China is such an engine for global trade, how severely will the global supply chain be disrupted? We should be watching how quickly the worldwide supply of N95 masks decreases to get a sense of supply chain disruptions.

As to your remaining points, they are even more important that the short-term economic disruption we will face from this outbreak. They need a whole dedicated forum here at FluTrackers for additional consideration and discussion.

 

[Gert van der Hoek]

[h=1]Economist Who Said SARS Cost $40 Billion Sees Bigger Hit Now[/h] By
Sybilla Gross 31 januari 2020 00:21 CET Updated on 31 januari 2020 08:07 CET

• 
  Cost of 2019-nCoV could be three-to-four times more than SARS
• 
  Virus-spurred panic may be a drain on economy, McKibbin says

The global cost of the coronavirus could be three or four times that of the 2003 SARS outbreak that sapped the world’s economy by $40 billion, according to the economist who calculated that figure.

The sheer growth in the Chinese economy over the last 17 years means the global health emergency triggered by the coronavirus outbreak has far greater potential to gouge global growth, according to Warwick McKibbin, professor of economics at the Australian National University in Canberra

 

[gsgs]

I think stock prices correlate very well with the economy. I was monitoring the China-AS50 Index in my threads, which should be similar.
The main drop was on Mon.27th , when the danger somehow first became clear with the quarantaines.
Most daily countrie's stock indices are pretty much parallel, not just now with the pandemic threat.
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Now I just remember, that we had mortality-bonds or how they were called. That would be interesting to check.
There should be some old thread from me here ...
Munich Re had emitted some, presumably expired meanwhile, but there should be others

found it:
https://flutrackers.com/forum/forum/...ity-bonds-catm

-----------------------------------edit-------------------
I didn't find much about current death bonds, but I found this :

https://www.worldbank.org/en/topic/p...sked-questions

https://www.globalcapital.com/artic...ond-to-pay-world-bank-if-coronavirus-advances

 

[bertrand789]

je n'ai rien lu sur le lien potentiel entre morbidit? et pollution http://aqicn.org/city/wuhan