As the outbreak of the corona virus continues to rage, Raymond James said that China's belated response is suggestive of comparisons with the Soviet Union's response to the Chernobyl nuclear disaster, and that the economic and market impact could worsen.
China's "slow response and ongoing unanswered questions seem to be really worrying for the Chinese people," wrote a team of Raymond James analysts led by Chris Meekins in a message to customers that heightened concerns about Secretary General Xi and the Chinese Communist Party Power under control.
The company said it had received "questions as to whether or not this will be a" Chernobyl-like "event for China – the comparison is the impact of the Chernobyl nuclear power plant disaster on the Soviet Union."
Raymond James said that after talking to government officials and scientists, the "worst is yet to come" and that the "market is underestimating the potential dangers and key government statements about the virus".
The Chernobyl disaster on April 26, 1986 was a nuclear accident in which large amounts of radioactive material were released into the air. The Soviet authorities have been criticized for their slow response.
"If this virus becomes a real global pandemic, Chinese leaders' actions will be under fire as they have undoubtedly contributed to the spread," said Raymond James before adding that "the real impact is likely to take years to take they are fully measured. ""
This map shows the recent spread of the reported cases of coronavirus
As of February 17, the Chinese government announced that a total of 72,436 people had contracted the disease, while 1,868 people had died.
However, the stock market has made up for its entire corona virus decline and a few more, with stocks climbing to record highs last week.
However, the market eased on Tuesday and Apple shares fell more than 2%. The company said it will miss its quarterly sales forecast due to limited global iPhone supply and lower Chinese demand due to the virus outbreak.
And Apple is just one of several companies that have cited the virus as a headwind for the current quarter. Many notice that it is too early to tell what the effects of the virus will be.
Health workers measure a person's body temperature during heavy snow, fearful of coronaviruses. Coronavirus (COVID-19) has killed more than 1,500 people in China and infected more than 66,000 people.
SOPA pictures | Getty Images
In the United States, the CDC has confirmed 15 cases of the coronavirus outbreak. But Raymond James said it is estimated that it will take between 2 weeks and 4 weeks to be clear about the spread of the disease in the US, and it increases the likelihood of "remarkable widespread cases" in the US from 1 to 1 7 on 1 in 5.
Raymond James believes last month's market comeback was a "liquidity rally," with investors hiding in the largest and most heavily traded stocks.
Investors "want as much liquidity as possible if they change their minds" and have to sell because of the worsening corona virus, the report said.
– Michael Bloom from CNBC contributed to the reporting.