Source: The virus has sickened more than 28,200 people in Asia
Investment Thesis
The Coronavirus breakout in China brought challenges to the Chinese economy in the short term, but it also could benefit certain sectors/companies. We are overall confident about the Chinese government's capability in controlling the situation, and propose our positive views on certain stocks that investors can watch during this special period.
Overall Assessment of the Situation
Undoubtedly, the Coronavirus breakout is the most significant public affair in China now. Originated in Wuhan, the virus is now spread all across the nation and has caused more deaths than that from the severe acute respiratory syndrome outbreak in 2002 and 2003 in mainland China.
The breakout not only brings concerns on public health, but also has a major impact on China's economy. As required by the Chinese government, companies will have to postpone the starting date after the Spring Festival. Airline companies are facing sharply declined demand, or even forced cancellation of flights. Tourism, food chains, and many other consumer industries will take the hit, since people are recommended to quarantine at home as much as possible.
On the other hand, the Chinese government has been called out for efficiency and transparency in handling this emergency. Unlike SARS in 2003, people now have access to real-time updates on the number of infected cases, as well as confirmed death and cured ones. The government essentially "locked down" Wuhan on January 23rd, which may sound crucial but is proven to be the most effective approach in preventing a national disaster. So far, nearly 70% of the confirmed infections and 96% of the deaths are within Hubei province. The miracle of building a hospital within 10 days should also add to people's confidence in the Chinese government in fighting this emergency.
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