by Hans Izaak Kriek*
The impact of the coronavirus is bigger than expected. The expanding of the virus turns the stock markets in deep red. This is considered a "very sharp" loss.
The decline started immediately after a weekend full of news about the rapid spread of the virus in Italy and South Korea. Stocks, in particular, yield a lot in the financial world and the technology sector. Because of the virus outbreak, the oil price is falling and the gold price is rising. Gold is considered a refuge.
Investors were shocked by the corona virus outbreak in Italy last weekend. The stock exchanges in London, Paris and Frankfurt fell by 4 percent and more. In Italy, the FTSE MIB in Milan now records a loss of almost 5 percent. Italy is the hardest hit of all European countries by the virus.
Italy confirmed its seventh deaths from the coronavirus as authorities moved to close schools, bars and other public spaces in more than 10 northern towns. The number of detected infections in Italy has risen sharply, to 220. The source of the infection is unknown. In northern Italy, towns are totally isolated from the outside world. The Carnival of Venice has been canceled, as well as many church services and sports competitions. For fear of the virus, Austria has decided not to allow trains from Italy through the border crossing. It is striking that Northern Italy is struggling with an explosive corona virus outbreak. A special working group is going to discuss the establishment of controls at the border with Italy in Austria and there is an EU debate on the deteriorating situation in Italy.
French Health Minister Olivier Veran said he would talk to his European counterparts soon to discuss how to best cope with a possible epidemic risk in Europe as Italy battles an explosion in cases.
"Tonight, there is no epidemic in France. But there is a problematic situation at the door, in Italy, that we are watching with great attention," Veran told a news conference.
"The situation tonight is very evolutive at the international level," he added. "I spoke with my Italian and German counterparts. We have agreed to have a discussion between several European health ministers, probably next week, to assess how we can together face epidemic risk," he said.
Investors’ shock reaction is easy to explain in recent weeks, the corona virus outbreak in China has caused global problems. Extreme measures were taken by the Chinese government to curb the spread of the virus.
The region where the virus appeared, around the city of Wuhan, was sealed off from the outside world. The result was that factories in the area could produce less or no production at all due to a shortage of parts and personnel. Car manufacturers, among others, ran into problems as a result.
If this scenario also becomes reality in Europe, it will have consequences for the European economy, which grew by an economical 1.2 percent last year. The same modest growth rate is expected for this year.
The airlines also have to cope with major blows at the various European fairs. The budget airlines Ryanair and easyJet, which mainly fly within Europe, saw 10 and 12 percent of value evaporate. Air France-KLM lost 9.3 percent in Amsterdam. Lufthansa lost 6.8 percent in Frankfurt and IAG, the owner of British Airways and Iberia, dropped 7.3 percent in London.
Territories with confirmed cases of COVID-19 are Australia, Belgium, Cambodia, Canada, China, Egypt, Finland, France, Germany, India, Iran, Israel, Italy, Japan, Lebanon, Malaysia, Nepal, Philippines, Russia, Singapore, South Korea, Spain, Sri Lanka, Sweden, Taiwan, Thailand, United Arab Emirates, United Kingdom, United States and Vietnam.
The World Health Organization, WHO has warned that the window of opportunity to stem the deadly epidemic was ‘narrowing’ amid concern about a surge with no clear link to China. Doctors and experts from the World Health Organization (WHO) visited the Chinese city of Wuhan this weekend. It is the first time that the organization visited the city with more than 11 million inhabitants since the virus broke out.
Neighboring countries introduce travel restrictions as Iran reports 43 infections and eight deaths. Turkey, Pakistan and Armenia have closed their borders with Iran as the latter reported more coronavirus infections and deaths, prompting neighboring Afghanistan to also travel restrictions.
Meanwhile, Chines President Xi Jimping described the outbreak as ‘the largest public health emergency’ since the founding of communist China as the death toll on the mainland reached more than 2,600 with almost 80,000 infections reported as of Sunday.
By far the most are in Wuhan. The Chinese government has announced the conversion of 13 billion euros to combat the virus outbreak. Wuhan, the city where the virus manifested itself in December, remains isolated for the time being.
New cases of infection with a new coronavirus known as COVID-19, which emerged in Wuhan, are being reported daily around the world. In the meantime, hundreds of cases have been confirmed elsewhere, with the virus now present in a lot of countries. Outside China, there are now 2,074 cases in 28 countries including 23 deaths, WHO Director-General Tedros Adhanom Ghebreyesus said. He said the sudden increase in cases in Italy, Iran and South Korea are ‘deeply concerning’.
“Does this virus have pandemic potential? Absolutely it has. Are we there yet? From our assessment, not yet,” Tedros said. “This is not the time to focus on what word we use. That will not prevent a single infection today or save a single life today.”
*Editor-in-chief at Kriek Media International
By: N. Peter Kramer
