By Megan Davies
NEW YORK (Reuters) – Investment advisers are increasingly concerned that the US authorities are not doing enough to prevent a widespread coronavirus outbreak in the country, which may further harm the already troubled markets.
Her criticisms include the number of people who have been tested by the United States Disease Control and Prevention Centers (CDC), which some believe are too low, the potential difficulties in imposing closures on US cities, and fears that the White House could mess up containment efforts.
Concerns have heightened the uncertainty surrounding the outbreak of the corona virus in recent weeks as investors strive to adjust their portfolios to the price of the virus' potential damage to the global economy and assess its further impact on asset prices.
The CDC states on its website that "As of February 24, CDC teams have been working with the Department of Homeland Security at 11 airports, where all flights from China are designed to screen and return travelers returning to the United States to forward to the US health departments to monitor self-monitoring. "
Secretary of Health Alex Azar said Thursday morning that the CDC had tested 3,625 samples for the fast-moving virus.
For some investors and analysts, these assurances sound hollow.
"A lot of what we've seen about this virus has shaken confidence in governments," said James Bianco, director of Chicago-based Bianco Research.
His list includes doubts about China's case count accuracy, criticism of Japan's handling of a cruise quarantine in one of its ports, and the comparatively small number of people the US authorities have tested so far.
Concerns about the growing number of cases outside of China sent the S&P 500 into the intraday correction area on Thursday morning. Stocks had suffered an earlier blow on Wednesday after health officials in Nassau County, New York, said they had monitored 83 people visiting China who may have been exposed to the coronavirus. Governor Andrew Cuomo said the state has had no confirmed cases so far. (L2N2AQ192)
On Wednesday evening, US President Donald Trump informed the Americans that the risk of coronavirus had remained "very low" and appointed Vice President Mike Pence to lead the US response to the looming global health crisis.
Bianco said he feared that many investors are still complacent about how quickly the number of cases in the U.S. could multiply, as is the case in countries like Iran, Italy, and South Korea.
He advises his clients to kick lightly until the full extent of the outbreak is known.
"I would rather risk a missed opportunity by not being in the market or being underweight and finding out that this is not a big deal than being fully invested and worried that this will worsen," said Bianco.
"HUGE RISK AMOUNT"
Others are concerned about the consequences if the United States were forced to implement a ban similar to that imposed by the Chinese authorities in Hubei Province, the epicenter of the coronavirus outbreak.
Wuhan, Hubei's capital, imposed strict controls on the movement of the residents, then eased them and later announced that the relaxation had been revoked. Such measures could be more difficult to implement in the United States.
"Those of us who are here in Hong Kong and look at the financial markets believe that the system is extremely risky," said Simon Powell, equity strategist at Jefferies in Hong Kong.
Powell is particularly concerned that the virus could spread to people from outside of China who are not restricted to travel to the United States. He is particularly concerned about the outbreak in Iran.
Iran said Thursday that the number of coronavirus deaths has increased to 26, by far the highest number outside of China. The mortality rate among confirmed cases of the virus was around 10% in Iran compared to around 3% in other countries.
Powell also believes that a Trump administration is unlikely to choose reduced economic activity, and writes in a recent research report that "our basic hypothesis is that a Trump administration is unlikely to choose reduced economic activity and supply chain disruption to spread the virus. " if it showed up in the US, it would be more likely. "
Others have pointed out what they think are shortcomings in the CDC approach.
"The first response from the United States was to respond to confirmed high-risk cases or infections that are not aimed at more general public health containment," said Wouter Jongbloed, head of Exante's New York policy and risk analysis data ,
Since the coronavirus has spread far outside of China, CDC tests "were probably not effective enough to prevent a possible outbreak in the United States," said Jongbloed.