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Gone Viral

27 February 2020

Gone ViralInsights

I have to admit I am struggling to get my head around Coronavirus. According to the World Health Organisation, worldwide flu epidemics result in up to 5 million cases of severe illness and as many as 650,000 respiratory deaths each year. Deaths are more likely amongst the high-risk groups such as the elderly, infirm, very young and those with chronic medical conditions. The numbers sound terrible but when set against the world population of 7.8 billion we get a better perspective.

At the time of writing there have been 81,319 cases of coronavirus globally although over 78,000 of these were in China. There have been 2,771 deaths, 30,359 have fully recovered and, of the rest, 39,322 have a mild condition. This leaves 8,867 with a serious condition or worse. Of course, we do not know how many of these will prove fatal but let’s assume a very conservative 50%. That would equate to a death rate, including those who have already passed, of 8.8% of total cases. The equivalent WHO figure for flu is 13%.

We don’t see large swathes of the economy closed down when flu is doing the rounds. If we are unfortunate enough to catch it we take to our beds, dose up and keep out of everyone’s way. Yes, there are, unfortunately, fatalities, mainly amongst the same high-risk groups, and this remains the case even with the availability of vaccines. I can’t help but feel the global governmental response to coronavirus is a panic-stricken knee-jerk. In fact, the common response is to quarantine vast numbers of people who could have been in contact with a discovered carrier. I write as someone whose medical knowledge is minimal, to say the least, but surely it would make more practical sense to isolate and protect the high-risk groups. The symptoms, after all, for the rest seem generally pretty mild. There will, no doubt, be those who think I’m being heartless but this would have far less potential for economic disaster.

As far as global stock markets are concerned, we have seen a sharp, across the board, decline over the last week as the world’s above response has been seen to interrupt supply lines, particularly from China. Travel and tourism are obviously impacted to a high degree and consumer demand is dampened as everyone draws in their horns. There is an old adage that says “panic early or don’t panic at all” and I think it is appropriate at this point. For the long-term investor this may well turn out to be the correction (in the US) they have been hoping for. China is now, thankfully, reported to be seeing a decline in the incidences of new cases so this could, if it continues, begin to stabilise their market. As far as the UK is concerned, our globally cheap market has just got 10% cheaper. It may again be time to start drip-feeding funds in.


Russell Dobbs FCSI

Chartered Wealth Manager