The coronavirus’s repercussions are being felt far and wide, well beyond its starting point in China’s Hubei province. Countries reliant on Chinese demand have seen steep drops in their currencies, with the Australian dollar down around 5% in January, its worst month since 2016. The Thai and Korean currencies, exposed to China via tourism and goods exports respectively, are also taking a battering.
Growth forecast downgrades for China, the world’s No. 2 economy, are coming thick and fast, meaning estimates for other countries are being reworked too. Tellingly, ‘Dr’ Copper, the best- known gauge of economic health, is down 10% in little more than a week, and oil is headed for a fourth week of losses. World stocks have lost $1.2 trillion over the past two weeks and, depending on how the virus spreads from now, expect more to come. Selling may focus in particular on travel and leisure, with a European index of these sectors skidding to the lowest since October. The beneficiaries? The usual safe-haven plays: gold, for instance, has enjoyed its best month in five.