Yves here. MacroBusiness has enough of a very important article on the “novel coronavirus” outside its paywall for the great unwashed public to get the drift of the gist (and if you want to read the whole thing, they courteously provide for a 14 day free trial, with no credit card required, as you can see here). The analysis is persuasive and needless to say, not cheery.
I am kicking myself for having had the nagging sense that the combination of new coronavirus’ the assumed to be pretty long incubation period, high contagiousness, and moderately high fatality rate (at 2 to 2.5%, much worse than seasonal flu but less bad than SARS at 10%) was in a virulence sweet spot, but not being able to work out as to why.
Shih gets to the critical point: the mortality rate of the coronovirus isn’t so high as to deter many who might have it from taking risks, like getting on planes or trains or seeing family and co-workers. SARS was so dangerous that anyone who thought they had it would very likely seek treatment pronto and try to stay away from others out of concern for their well being.
By David Llewellyn-Smith, founding publisher and former editor-in-chief of The Diplomat magazine, now the Asia Pacific’s leading geo-politics website. Originally published at MacroBusiness
Via our friends at GLJ Research LLC in the US, comes an exclusive interview with China expert Dr Victor Shih who, in my experience, knows what he talking about.
Fireside Chat w/ China Economist, Victor Shih, Sheds Light on the True Extent of Coronavirus “Threat”. In short, after our conference call this morning with Harvardeducated Chinese economist & former principal for the Carlyle Group in its hedge fund arm in New York City, Victor Shih, we believe the market is grossly underestimating the potential negative knock-on effects from the coronavirus outbreak in China.
By way of background, we remind our readers that over the Nov. 2002-to-Jun. 2003 timeframe which defined the China SARS outbreak and agreed-upon month the pandemic was under control, 8K people were infected & around 800 died (i.e., a ~10% mortality rate over the 8 months). However, according to Mr. Shih, taking the confirmed number of coronavirus cases (i.e., 4.690K [as of 6:52pm EST] – Ex. 1) and adding in the ~6K suspected cases (of which Mr. Shih believes the lion’s share will convert into confirmed cases, given a near 1:1 conversion of suspected to confirmed SARS cases in 2003) the coronavirus pandemic is already larger, in just roughly one week’s time, than the SARS pandemic was over the entirety of its lifecycle.
Other takeaways, according to Mr. Shih, associated w/ the coronavirus center on: (a) a lower mortality rate of 2-3% (vs. ~10% for SARS), which leads to it spreading faster as the fear of death is lower (which, due to the harsh quarantine regiment, also emboldens carriers to hide it to get through airport scanners by taking Tylenol to lower their fever levels), (b) the virus being asymptomatic (meaning one can carry it without any noticeable symptoms), (c) 5mn people who were allowed to leave Wuhan (link) before China quarantined the city to contain the coronavirus outbreak, (d) Dr. Eric Daniels of Harvard, who believes the virus is mutating faster than SARS (link), (e) 7 provinces w/ over 100 confirmed cases, (f) the epidemiologists Mr. Shih has been briefed by both in the US and in China who say we are only in the early stages of the outbreak, & (g) the coronavirus outbreak will likely be much worse than the SARS pandemic given SARS was contained to 3 provinces (Guangdoung, Hong Kong, & Beijing), while the coronavirus has already spread to 25 provinces [link]) – air travel within China is ~8x more today vs. where it was during the SARS outbreak.
In short, in Mr. Shih’s view, based on his work suggesting “hundreds of thousands” of potentially infected Wuhan residents left for Shanghai & Guangdong, the number of cases being reported in these economically important provinces (66 and 207, respectively) are likely “grossly” understated, suggesting the impact to growth, globally, will be much worse than currently implied by market valuations.
Now for those of us outside China, the selfish question is: and what might its disease path be outside China and Asia? As of this hour, British Airways has cancelled all flights to and from China, but the US is holding off from doing so. If the incubation period really is typically close to 14 days (this is one of those frustrating important unknowns), aggressive measures are warranted. Reducing the inflow of potentially infected people and putting in place measures to track them could dampen the propagation.