A long slump ahead for DCE

The Wuhan coronavirus outbreak is likely affect market sentiment for a little longer with more new cases and drastic measures adopted to limit population movement in China.

Going forward, the outbreak is likely to have a huge impact on the economy especially China as it bears some resemblance to the SARS outbreak in 2002-2003 in term of rapid transmission to other Asian countries as well.

 

Longer holidays to prevent mass gathering

To curb the spread of the coronavirus, the Chinese authority has adopted some drastic measures in restricting public transportations.

Even the Lunar New Year holidays were extended to some aspect as companies are to reopen a week later on Feb 10 instead of Feb 3, while schools were slated to reopen later Feb 17.

The extension of holidays will affect China’s peak construction season which starts normally just right after the Lunar New Year holidays.

 

History to repeat itself ?

No one know how long the current coronavirus outbreak will end but we can take notes from previous similar event such as SARS outbreak in late 2002 to early 2003.

Previously, the SARS outbreak affected the Asian equity market for approximately five months, as the Asian market took around four months to bottom out and rose back to initial levels about a month later.

Although, no two events are exactly similar, but China can draw various lessons from the previous SARS incident and with new, better technology able to deal and contained the epidemic.