A little more than 17 years ago, the coronavirus SARS (Severe Acute Respiratory Syndrome) surfaced in China. Despite occurring at what proved to be the onset of a new bull stock market, SARS cast a months-long pall over world stock exchanges, particularly those in Asia and notably Hong Kong.
Two key reasons: this was the first coronavirus many investors (myself included) had seen, so it was especially scary; rather than quarantine infected individuals, local authorities in China decided to cover up the presence of the disease, so SARS had a chance to spread unchecked for several months.
The coronavirus MERS (Middle East Respiratory Syndrome) only captured world attention for a few days then it emerged in 2012. Overall economic/stock market conditions were favorable. Authorities moved quickly to contain its spread. And investors had already seen how SARS played out.
The new coronavirus, which doesn’t have a snappy acronym yet, comes from China and is a relative of SARS. One might expect that its impact on stock markets will be more like that of MERS than SARS. Two caveats: it is hitting China just as the annual New Year travel/spending/celebrating holiday is beginning; and markets have been rising for years. Economic activity is healthy but not awesome, and is beginning to slow in the US. Ex Hong Kong and mainland Chinese bourses and travel-related stocks, however, the new virus will be the possible trigger for a selloff, in my view, rather than a cause.