Coronavirus: Global Financial Markets Panic as China Locks Down 40M People
Jan 24, 2020 at 2:50 pm UTC by Tolu Ajiboye · 3 min read
The effects of the coronavirus in China are already being felt in the world’s financial markets. Conditions are predicted to worsen.
The financial markets in China and other parts of the world are currently on edge because of the coronavirus. As China tries to curb the spread of the deadly disease, it has also restricted movement in the country, sparking national outrage.
China Enforces Travel Restrictions
Chinese officials have now put a blanket travel ban on more than 10 cities. Authorities have also forced all travel agencies to temporarily discontinue all offered travel plans, whether domestic or international. The government has also halted all modes of transportation including buses, trains and flights scheduled to leave any of the 10 cities.
At the moment, the government has confirmed that there are 830 patients infected with the virus. Furthermore, it also suspects that there are more than 1,000 unconfirmed cases. The death toll has also increased to 26 people.
Effects of Coronavirus Travel Ban
As earlier mentioned, affected travelers in these cities are very unhappy and their anger is publicly palpable. The ban is coming just as people are preparing for the lunar new year and planning to travel, to celebrate with their loved ones. Previous estimates suggest that about 400 million Chinese people should be traveling to different parts of the country for the celebration.
Already the travel ban affects about 40 million people, and there is the possibility that Chinese authorities could further extend the restrictions to other parts of the country. This means that in addition to the 40 million, millions more could be affected.
Apart from spreading the disease around China, the travel ban will also help prevent an international health crisis. Already, other regions are recording confirmed cases as the situation worsens. They include Thailand, Taiwan, Vietnam, the U.S., South Korea, Hong Kong, Singapore, Japan and Macau.
Coronavirus Shakes Financial Markets
The world’s financial markets usually have a certain level of fragility which certain events easily disrupt. Analysts already predict that the coronavirus spread will dent the markets if China doesn’t find a solution.
According to a report from The Guardian, the effects of the virus are already being felt in these markets. For example, three mining companies that source raw materials from China are already losing weight. This is because there is a general fear if a reduction in the supply of these materials. They include Rio Tinto, Glencore, and Anglo American.
Luxury brands such as Gucci, Cartier and Louis Vuitton have all lost some weight. The price of oil has also crashed by 3%.
The current coronavirus epidemic is reminiscent of the SARS outbreak more than 17 years ago. Drawing from events at that time, the Société Générale bank has predicted a possible 6% crash in China’s economy. This is just for 2020’s first quarter alone.
Oxford University China Centre associate George Magnus has also corroborated the possible downturn. According to Magnus, the Chinese economy saw some stability late last year. However, Magnus suggests that the coronavirus could disrupt that.
“The idea was that we would see a modest rise in economic growth in the first and second quarters of the year. That might not actually happen. It may cause stagnation around current levels of activity to continue.”
It might be a long time before China finds a lasting solution. BBC says that according to scientists, between 1.4 and 2.5 people are at risk of infection from every person already infected. While these figures are early, it already signifies a big problem.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he's not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.