The coronavirus outbreak has now moved way beyond China’s borders, spooking investors as it goes global.
The virus is spreading more rapidly than they predicted, potentially triggering a prolonged global economic slowdown.
Asia has become the manufacturing hub of the world over the last four decades and US multinational companies that produce their goods in the region are facing a lot of financial exposure.
China’s industrial output tops all other countries in the world and it is a major importer of goods . It has the world’s second largest economy, while Japan ranks third. Many factories are now idle as people stay home or in quarantine.
Major U.S. companies, including Apple, Coca-Cola, Procter & Gamble, United Airlines and Mastercard are warning about the potential impact the virus will have on 2020 results. Investors are increasingly worried that the virus will strain cross-national supply chains for companies like Apple.
On Monday, stock indexes hit historic lows as the Dow Jones index on Wall Street tanked more than 1,000 points but stocks rebounded modestly on Tuesday.
Health officials relied on the expertise of doctors and scientists who said containment strategies like quarantines would control the outbreak, but the virus has defied them. Investors seem to be losing faith in their advice as they are clearly unable to truly get a grip on the infectious capabilities of the virus.
There is no vaccine, no way of preventing its onset and no cure. Investors hate unpredictability when they have to take risks with their wealth.
China’s secretive, totalitarian government has given contradictory information about the genesis of the outbreak. They also launched a crackdown on journalists who were trying to inform the world about harsh containment strategies on the mainland. This has also stymied efforts of health officials around the world to understand the true nature of the deadly virus, which has spread to more than two dozen countries in the month of February.
As of Tuesday, China’s National Health Commission reported 77,658 confirmed cases of COVID-19, with 2,663 deaths nationwide. South Korea has confirmed an additional 84 cases, bringing the total number of infections nationwide to 977.
Iran has recorded the highest number of deaths from the coronavirus outside of China, announcing that 95 people had been infected, with 15 deaths nationwide.
The deputy health minister was sweating and swooning at a news conference on Monday and tested positive for the virus one day later, according to a report from the semi-official ILNA news agency.
Italy is also scrambling to contain an outbreak that started in two rural areas near Milan and Venice, as new cases are now appearing as far south as Sicily. At least 283 people have contracted the virus as of Tuesday morning, up from around 230 the day before, Italian authorities said. Seven elderly people who were also in the hospital with other illnesses have died.
Croatia and Austria reported their first cases of the virus on Tuesday and a hotel in the Canary Islands is quarantining hundreds of guests after an Italian doctor tested positive for the virus.
The rapid spread to other countries over the weekend has many companies reassessing 2020 growth estimates. Blackstone Vice Chairman Byron Wien told CNBC that even if the virus outbreak hurts economic growth for at least the first quarter, the domestic and global economies could still have a solid year.
“The U.S. was doing very well in spite of the virus. I think if the virus is brought under control the world economy will continue to expand,” Wien said.