Disease X Outbreak Infects Markets
Medical professionals are calling it the ‘Wuhan virus.’ Investors are calling it a tailwind for their healthcare stocks, and everyone else is calling it the world-ending ‘Disease X!’
A mysterious virus strain has taken hold in South East Asia. It was first reported in the Chinese city of Wuhan, but it’s not been contained there. The common cold-like lung infection, known as a coronavirus, is spreading. Over two hundred cases and numerous deaths have been recorded as far-flung as Japan and Thailand, rallying demand for face masks and fully stocked first aid cupboards at home.
Investors’ eyes are lighting up at the prospect. The ChiNext, a stock market of healthcare stocks in China, notched its highest finish in years recently. Tianjin Teda and Jiangsu Bioperfectus Technologies, a firm that claims to be able to detect the virus, rose 10% yesterday as worsening reports of the outbreak filtered through.
For now, there’s a strong feeling of opportunity around the country’s flagship Shanghai Stock Exchange (SSE). However, the only thing more contagious than this disease could be the fear of it. Market players are acutely aware of that fact as they watch the prices of other stocks flicker more violently.
China has made no secret of its global drug-making ambitions. The superpower wants to be first in biotech and pharmaceuticals and is fast-tracking its drug approval pipeline with that goal in mind. An ageing population consumes traditional Chinese medicine while a growing middle class consumes modern remedies. It’s a growth sector, and predictably, American Big Pharma wants in.
Amgen beat Pfizer and Merck to the punch by taking a 20% stake in Chinese oncology giant BeiGeine last year. Of course, none of it will matter if the Wuhan virus wipes us all out, but many Western investors prefer the American investment vehicle that takes them into China. Is now the time to get onboard when there’s a bug going around, or flee?
