Coronavirus (COVID-19)” searches seemed to have peaked on 13 February and financial markets were therefore pricing in a quick economic recovery given the effort of the Chinese authorities. However, the news of the rapid spread of the virus in Italy, Iran and 36 other countries has raised the fear of a global pandemic (although the WHO has yet to give it this label) and coronavirus is taking centre stage again this week in markets and news.

The number of coronavirus coronavirus (COVID-19) cases has surpassed 81,000 as of 26 February leading to the death of at least 2,715 people. While most cases have so far been registered in China, South Korea, Italy and Japan have all recorded more than 100 cases each, showing the difficulty of authorities to contain the contagion.

The strong market selloff has come with higher volatility. The VIX index, measuring the volatility of US stocks, reached an intraday high of 40 on 28 February, a level unseen since December 2018.

While comparison with previous virus contagion may be helpful to assess the potential market impact of the current coronavirus, the importance of China within global exchanges is much bigger than during the previous episodes of SARS in 2003 or swine flu in 2009.

The economic impact of the coronavirus coronavirus (COVID-19) could also be stronger this time given the stringent measures taken by authorities, be it in China, Italy or elsewhere. However, one may hope that the economic impact will be over a shorter time period if the measures are finally successful in containing the virus. While Q1 2020 economic figures may not be available before April for most countries, the effect of the coronavirus on the economic activity is likely to transpire into companies disclosures including potential profit warnings.