UK Confirms First Cases Of Coronavirus As Countries Ignore WHO

Summary:

• UK confirms first two coronavirus cases after multiple scares
• Confirmed cases in China rise to 9,692 from 7,700 a day earlier
• Risk-off mood hits stocks
• Impact of virus “not fully reflected” in rigged China PMI number
• At least two-thirds of China’s economy to stay shut.
• Goldman disagrees with Ross, says virus blowback will wipe 0.4% off US GDP growth
• ‘The U.K. health department confirmed two cases of coronavirus in England on Friday, while the U.S. and Japan advised citizens to avoid traveling to China.
• Hong Kong schools shuttered until March 2
• Singapore closes borders to Chinese travelers, first southeast Asian nation to do so.
• 43 airlines cancel flights to China

* * *

For a few hours on Friday, the global community will turn away from obsessively following outbreak news to acknowledge the UK finally leaving the EU. But with US stocks on track to open in the red once again now that the first cases have been confirmed in the UK after multiple scares, all other news on Friday will be more or less irrelevant.

Though the WHO insisted that restricting travel to China during the outbreak simply wouldn’t be necessary, airlines and governments continued to cancel flights and tighten border restrictions. American Airlines has acquiesced to the pilots union, which filed a lawsuit demanding that flights to China be cancelled, and cancelled two of its routes. According to Business Insider, 43 airlines – Lufthansa, British Air, United, American, Air Canada, Air Seoul, Air France, etc. – have cancelled some or all routes to China, with some of the cancellations stretching out until late March. Most have cited a drop in demand as the reason as passenger plane traffic has plummeted. Russia has closed its border, Italy has cancelled flights to China, while the US and Japan have implemented the most urgent travel warnings advising citizens not to travel to China. Other governments, including the UK, have warned against travel to Hubei.

Singapore has also closed its borders to all Chinese travelers, becoming the first southeast Asian country to do so.

The number of cases and the death toll haven’t budged from late Thursday in New York, when we filed our last update. However, speculation about underreporting by the Chinese government has intensified in recent days. Though the total number of cases of the novel coroanvirus outbreak has already surpassed the total from the entire 2002-2003 SARS outbreak.

Research suggesting (though not confirming) that the virus can spread asymptomatically – meaning that individuals are contagious before they’re even aware they have contracted the virus.

Roughly half of Chinese will stay home from work next week, and indefinitely until the virus is contained, according to local officials. This is tantamount to two-thirds of the economy – the second-largest economy in the world – virtually guaranteeing that knock-on impact to global growth will be severe.

Now to the big news on Friday: UK health officials have confirmed two cases of the virus in England. The victims are being treated at a hospital in Newcastle.

BREAKING: two cases of coronavirus being treated at Newcastle’s infectious disease unit.
New Gov advice: anyone coming back from China with respiratory symptoms should self isolate for 14 days.
Anyone coming back from Wuhan, with symptoms or not, should self isolate for 14 days.

— Kate Proctor (@Kate_M_Proctor) January 31, 2020

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As Beijing scrambles to contain the outbreak, the contagion has spread to all 31 of mainland China’s provinces, municipalities and autonomous regions, and at least 19 other countries or territories. After confirming its first cases on Thursday and cancelling all flights to China, Italy has declared a state of emergency to last six months.

Though officials are touting unexpectedly strong progress on their two slap-dash coronavirus hospitals – Huoshenshan and Leishenshan – being erected in Wuhan to house another 2,300 patients, Beijing has sent more than 7,000 medical workers to the province to help fight the disease. As of Thursday, the province had reported 5,806 confirmed cases, with 32,340 people still under observation for infection. A total of 804 patients were in severe condition and 290 in critical condition. Across China, there were more than 100,000 people under observation as of Friday morning, according to Bloomberg.

As mask shortages led to absurd price gouging, China is importing more than 56.228 million masks in the past week, according to the General Administration of Customs. Some 290 million yuan (US$41.8 million) worth of protective gear was imported between Jan. 24 and Jan. 30. That included the masks, 69,000 pairs of goggles, and 738,000 items of protective clothing, according to the SCMP.

Shocking photos published by the Guardian that were allegedly smuggled out of Wuhan show nurses at a hospital making their own makeshift facemasks out of cloth.

Hong Kong schools have announced that they will remain closed until March 2. Many countries, including Vietnam and the US, have suspended some or all visa processing for Chinese citizens, or residents of Hubei.

Goldman said it expects the outbreak to wipe 0.4 percentage point off US GDP growth during Q1. However, the investment bank believes growth will rebound in Q2, and that the long-term impact would be negligible. Labor Secretary Wilbur Ross disagrees, arguing that the outbreak will help bring more jobs back to the US.

One thing’s for sure: The total economic fallout will be difficult to gauge until we figure out how long it will take to implement a vaccine. If a vaccine really is a whole year away, that could become a problem.