SINGAPORE (Jan 30): The novel coronavirus is expected to infect more people than the 8,422 infected globally during the SARS outbreak back in 2002-2003, but the total number of deaths will likely be lower than 774 lives claimed by SARS, according to Maybank Kim Eng Research.

So far, at least 170 have died from the Wuhan virus.

As at Jan 29, there have been more than 7,000 cases confirmed in China alone – surpassing the number of infected cases in the Middle Kingdom during SARS. There are 91 confirmed cases outside of China, including 10 in Singapore.

In a Wednesday report, lead analyst Chua Hak Bin says, “China’s early warnings and rapid response have contained the deaths and spread to the rest of Asia and the world so far. During SARS, more than half of the deaths were from outside China, including Hong Kong, Taiwan, Canada and Singapore.”

He believes that the Chinese and other governments’ quicker and more aggressive policy response – relative to SARS – could help intensify the short-term negative impact on GDP growth, but more importantly, shorten the duration of the virus outbreak.

Comparatively, during the SARS outbreak, most countries saw a negative impact on GDP growth for one quarter, ranging from about 2% points for China to 4% points for Singapore, Hong Kong and Taiwan. Indonesia and the Philippines were the lease impacts. Most of these countries saw growth rebounded in the subsequent quarter.

The SARS market sell-off lasted about a month for global and ASEAN indices, while China lasted about two months. During then, Hong Kong, Singapore and China stock markets dropped about 10%, while the rest of ASEAN fell by about 5%.

Fortunately, markets recovered quickly and exceeded previous highs once the SARS outbreak was contained. Sectors that were worst hit mirror the current episode: tourism, travel and retail.

In Singapore, the government has imposed travel restrictions for travellers who have been to Hubei in the last 14 days, as well as holders of Hubei issued passports.

Meanwhile, Scoot, Singapore Airline’s (SIA) low cost airline, has cancelled all of its flights to Wuhan on Jan 23. SIA has also suspended layovers for its pilots and cabin crews on flights to Beijing and Shanghai, requiring them to fly back to Singapore immediately, instead of stopping overnight in the two Chinese cities.

Retail mall owners have also take a big hit amid this virus outbreak as CapitaLand was requested by the Chinese government to close six of its malls in China, while the rest of its other malls across China will continue operating, but with shorter hours. Sasseur REIT has also temporarily closed all four retail outlet malls in its portfolio.

“There is a risk of a larger economic negative impact in this current virus outbreak (compared to SARS), even though the number of deaths outside China is zero so far,” says Chua.

First, China’s economy is now far larger, with nominal GDP of about $14 trillion, compared to just $1.5 trillion in 2003. Secondly, China is more connected to the rest of the world, for example, number of air routes having more than quadrupled (4,900 in 2018, compared to 1,100 in 2003).

Third, China’s outbound tourists has soared, with 27 million China visitors to ASEAN in 2018 (compared to 2.9 million in 2003). Moreover, ASEAN is now more dependent on China’s growth, with China’s market share of ASEAN exports at 14% in 2018, from 6.5% in 2003, and tourist share at 22% in 2018, from 7% in 2003.

“The Wuhan virus outbreak has cast a shadow on the prospects of a manufacturing and capex recovery, just as the clouds over the US-China trade war was clearing, says Chua.

Countries that are more open and dependent on China trade and tourism are expected to be negatively impacts. The analyst believes that Singapore and Thailand will be the most impacted and will likely see some growth downgrades. On the other hand, he believes that Malaysia and Vietnam will see a small impact, while those that are more domestic-oriented and less reliant on tourism receipts, such as Indonesia and Philippines, will be the least impacted.