Coronavirus Growth Rates and Market Reactions

  • The New York Times – As Coronavirus Spreads, Hong Kong Limits Border Traffic With Mainland China
    Facing heavy pressure even from some pro-establishment politicians, Chief Executive Carrie Lam is shutting down train lines and limiting flights and tourism.

    Carrie Lam, Hong Kong’s top official, said on Tuesday that the city would sharply cut the number of visitors from mainland China in an effort to control the spread of the new coronavirus that emerged in the city of Wuhan last month. The limits, including the closure of rail and ferry service and reducing flight arrivals by about half, will begin at midnight Thursday. They follow days of increasing pressure from health care workers, epidemiologists and even pro-Beijing politicians who have traditionally supported Mrs. Lam’s government. Hong Kong will close several of its border crossing points and increase checkpoints to detect fevers at those that remain, Mrs. Lam said. China will also stop issuing visas for individual travelers from the mainland, which make up about half of visitors to Hong Kong, she added.

  • Tass (Russia) – Chinese coronavirus dangerous at 2 meter distance, expert says
    The expert noted the virus might be transmitted by contact, if it gets in human eyes or on mucous membranes

    The 2019-nCoV coronavirus may be contagious at a two-meter distance, says National Health Commission expert Li Xingwang of Beijing Ditan Hospital. “Everyone must wear protective masks and reduce the number of close contacts to as low as possible. By ‘close,’ we currently mean a distance of one to two meters – the infection may happen at this distance,” says Chinese media quotes the expert as saying.

  • Kyodo News – Japan sees 1st coronavirus case not linked to travel to China
    Bus driver infected with coronavirus drove 2 tour groups from Wuhan

    The government on Tuesday confirmed two more cases in Japan of the new coronavirus, including a tour bus driver who has never been to the central Chinese city of Wuhan, where the outbreak of the deadly virus began in a seafood and poultry market. The findings bring the total number of confirmed infections in Japan to six. The bus driver in his 60s drove two groups of Chinese tourists from Wuhan earlier this month, Japanese health minister Katsunobu Kato said.

  • Reuters – German auto supplier Webasto says two employees infected with coronavirus

    German car parts supplier Webasto on Tuesday said a second employee had become infected with the coronavirus following the visit of another employee, from China, to the company’s headquarters in Stockdorf, Bavaria. “The auto supplier Webasto confirms that the person infected with the Coronavirus is from Starnberg and an employee at the company headquarters in Stockdorf,” Webasto said. Webasto on Monday had said a Chinese employee from Shanghai had tested positive for the virus upon his return to China following his visit to the company headquarters.

  • Summary

    The growth in coronavirus infections has continued along a geometric progression for the last 12 days. Should it continue along this path, infection cases could approach 100,000 in a week.


    The following charts were constructed from the daily update from the National Health Commission of the People’s Republic of China.

    The blue line in the chart below shows the actual number of reported coronavirus cases stands at 4,515 as of January 27.

    The orange line is a simple progression that assumes a 53% increase in the cases every day. Or, one person infects 2 to 2.5 people. So it is a simple multiplier, nothing more. This is known as R0 (R-Naught), or the infection rate. Note the chart is a log scale.

    The reported number of infections perfectly track this simple multiplier. This is how viral inflections growth, along a geometric path.

    The chart below shows that the virus has tracked this growth rate 12 straight days. If this track is not altered, the number of reported cases will top 16,000 by Friday.




    To many, such a geometric progression is alarming (see the tweet immediately above).

    As the orange line below shows, this type of growth rate would suggest 80,000+ infections next Monday and 138 million by February 20.



    Is this growth rate possible? Over the near-term yes.

    The National Health Commission of the People’s Republic of China offers another statistic, the number of people in quarantine suspected of having the coronavirus. As of January 27, over 44,000 are quarantined. Many of these people will unfortunately be reported as infected.



    The last chart shows the death rate and the number of severe cases. To date, the death rate has been fairly constant between 2% and 3% of those infected (bottom, green). Severe cases make up roughly 20% of all cases (bottom, red).



    To be absolutely clear, this is NOT a prediction that 100 million people will be infected by Feb 20. Rather, this has been its growth rate for the last 12 days. A vaccine, mutation or successful quarantine/isolation could help reduce this growth rate.

    Market Implications

    Mongolia and North Korea have already closed their border with China. Hong Kong is restricting its border. As cases continue to emerge in Japan and outside of Asia, calls will grow for the Chinese to engage in drastic action to stop its spread.

    This potentially means Chinese businesses will halt, flights will stop (see the plunge in crude oil on oversupply worries) and the global supply chain will grind to a halt. This could have enormous economic consequences for global growth.

    While not overlooking the human tragedy, the markets have the difficult task of pricing an event that has a small chance of being devastating to global growth, but a more likely outcome of being contained. Yesterday’s selloff in stocks was likely a response to the fact that this virus has continued to grow at a geometric pace thus far. In trying to quantify the market impact, perhaps these charts offer one way to gauge the severity of this virus in the days ahead.