Comparison of 2003 SARS outbreak and 2020 coronavirus outbreak
Scale
• 2020 Wuhan coronavirus outbreak: Over 17,000 cases as of 2nd February.
• 2003 SARS outbreak: 7,335 cases in Greater China and a global death toll of 774.
Affected sectors
• 2020 Wuhan coronavirus outbreak: Transportation, tourism, hotels and F&B.
• 2003 SARS outbreak: Transportation, tourism, hotels and F&B.
Impact on retail sales
• 2020 Wuhan coronavirus outbreak: Shopping activity has fallen significantly as people have been advised to stay home. Many shops in China are closed including Haidilao, IKEA, Apple and Starbucks.
• 2003 SARS outbreak: China retail sales and hotel & catering growth slowed.
GDP Growth
• 2020 Wuhan coronavirus virus: Hubei province accounts for 4.6% of China's GDP in 2019. Positive impact of the Phrase One trade deal with the US could be diluted.
• 2003 SARS outbreak: China GDP growth slowed to 8.9% in Q2 2003 while Hong Kong recorded a quarter of contraction -0.3% during the same period. *Both economies rebounded sharply in H2 2003 after SARS was bought under control.*
From a longer perspective, the outbreak will have limited impact on industrial and logistic market as e-commerce remains the dominant demand driver.
Highly leveraged developers and landlords could come under significant pressure, particularly if they have limited cash flow.
From CBRE Greater China Research Team.
Conclusion:
• We want to avoid bonds from highly leverage China bond issuers.
• If the 2002-2003 SARS, may serve as a guide, the overall impact of the virus outbreak may be modest and short lived on the global economy.
• Hence we want to buy into quality, large cap stocks, ETF, unit trust when their prices have come down.
• 2020 Wuhan coronavirus outbreak: Over 17,000 cases as of 2nd February.
• 2003 SARS outbreak: 7,335 cases in Greater China and a global death toll of 774.
Affected sectors
• 2020 Wuhan coronavirus outbreak: Transportation, tourism, hotels and F&B.
• 2003 SARS outbreak: Transportation, tourism, hotels and F&B.
Impact on retail sales
• 2020 Wuhan coronavirus outbreak: Shopping activity has fallen significantly as people have been advised to stay home. Many shops in China are closed including Haidilao, IKEA, Apple and Starbucks.
• 2003 SARS outbreak: China retail sales and hotel & catering growth slowed.
GDP Growth
• 2020 Wuhan coronavirus virus: Hubei province accounts for 4.6% of China's GDP in 2019. Positive impact of the Phrase One trade deal with the US could be diluted.
• 2003 SARS outbreak: China GDP growth slowed to 8.9% in Q2 2003 while Hong Kong recorded a quarter of contraction -0.3% during the same period. *Both economies rebounded sharply in H2 2003 after SARS was bought under control.*
From a longer perspective, the outbreak will have limited impact on industrial and logistic market as e-commerce remains the dominant demand driver.
Highly leveraged developers and landlords could come under significant pressure, particularly if they have limited cash flow.
From CBRE Greater China Research Team.
Conclusion:
• We want to avoid bonds from highly leverage China bond issuers.
• If the 2002-2003 SARS, may serve as a guide, the overall impact of the virus outbreak may be modest and short lived on the global economy.
• Hence we want to buy into quality, large cap stocks, ETF, unit trust when their prices have come down.
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