International

Travel Stocks Drop Amid Coronavirus Concerns

Less than a month ago, the outbreak of a new virus in the city of Wuhan centered on a cluster of consumers who had been exposed to live animals at a local food market. The virus has since been classified as a coronavirus — a genetic cousin of the SARS virus, which has caused hundreds of deaths worldwide. Though less serious than SARS, the new virus reportedly causes pneumonia-like symptoms in those who contract it.

The virus, it seems, is spreading rapidly. As of the third week of this month, it has grown to 300 cases spread across five nations, including China, Japan, Thailand, South Korea and (as of this week) the U.S.

The U.S. patient recently traveled to Wuhan, China, and is currently hospitalized in Everett, Washington with the pneumonia-like symptoms that are the hallmark of the illness — with local authorities reporting that he is in good conditions and recovering. U.S. authorities previously stated that they expect cases to be reported in the country, and, given the rapid spread of the disease across borders so far, there will likely be more cases to come.

The good news — insofar as there is good news when a new virus emerges and begins a rapid worldwide spread — is that the virus is not attached to a high mortality rate among those who contract it. So far, six people have died, despite the hundreds infected.

The virus, however, is definitively spreading person to person, according to The Wall Street Journal — and, thus, this outbreak is happening at the worst time of year, as millions all over China and much of Southeast Asia are gearing up to celebrate the Lunar New Year this weekend. Hundreds of millions are expected to travel within China, crammed into trains, planes and buses as they head far and wide to visit family and friends for the holiday.

The massive national holiday is considered a peak time for international travel among Chinese nationals. According to CNN, 7 million Chinese tourists traveled abroad during the Lunar New Year holiday in 2019, and more were expected this year.

“One of the consequences of a more connected world is that outbreaks have the potential to spread internationally much more rapidly than was the case 50 years ago,” said Mike Turner, director of science at U.K.-based global health charity Wellcome Trust.

Chinese authorities are now trying to quash the outbreak without discouraging the full festivities of the Lunar New Year, the biggest holiday on the calendar in China, and much of Asia — and a major commercial event. Global brands like Nike, Apple and Louis Vuitton have spent millions of dollars marketing for the holiday, and billions of dollars will be exchanged via cash-stuffed red envelopes — or the digital equivalents supplied by Alipay and Tencent. Consumers will buy gifts, make travel arrangements and purchase the fixings for a family feast, among many experiences over the 16-day celebration, culminating with the lantern festival set to happen on the 15th day. Chinese officials have a great incentive to slow the spread of the virus, but no one wants to disrupt the New Year’s celebration.

Thus far, according to the data, the new coronavirus outbreak has done little to slow or even greatly alter travel plans during the season, according to The Washington Post. Outside of Wuhan itself (where the outbreak began, and where the vast majority of cases are clustered), no events have been cancelled or rescheduled, and flights into and out of China are up roughly 8 percent over average during the holiday. Wuhan did have a public event for which about 200,000 tickets were distributed, but complaints, according to Chinese media, have been fairly mild.

At airports, there have been additional precautions taken to screen travelers who look as though they may have the flu. However, on average, airports will be dealing with about 17,000 flights worth of consumers per day during the festival.

Chinese officials have declared the new virus outbreak as a Class A infectious disease, like its cousin SARS, which allows medical authorities to quarantine patients, and the government to lock down affected areas and shut down traffic routes. Yet, they are not forecasting a major impact from the latest outbreak during the Lunar New Year celebration and beyond.

Global stock markets, on the other hand, are looking far less certain of smooth sailing going forward, as the disease gains a foothold in more places. Dow stocks dropped 152 points on Tuesday (Jan. 21) on concerns about the spread of the Wuhan virus, with travel hit particularly hard. Stock market watchers noted, though, that they were less concerned about the spread of this new disease, given that it is less deadly than SARS — though its effects are still notable regionally.

“For now, we are keeping our economic forecasts for this year unchanged, but the spread of the virus is clearly a major downside risk, and we will continue to monitor the situation closely,” wrote Capital Economics Senior Economist Gareth Leather, according to CNBC. “If the virus does spread, the worst affected countries are likely to be those most dependent on Chinese tourist spending. In addition to China itself, Hong Kong stands as the most exposed. Thailand and Vietnam are also vulnerable.”

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