News that a new virus that has afflicted hundreds of people in central China can spread between humans has rattled financial markets and raised concerns it might wallop the economy just as it might be regaining momentum.
Health authorities across Asia have been stepping up surveillance and other precautions to prevent a repeat of the disruptions and deaths during the 2003 Severe Acute Respiratory Syndrome (SARS) crisis, which caused $40 billion-$50 billion in losses from reduced travel and spending.
The first cases of what has been identified as a novel coronavirus were linked to a seafood market in Wuhan, suggesting animal-to-human transmission, but it now is also thought to be spread between people.
As of Wednesday, some 440 people were confirmed infected and nine had died from the illness, which can cause pneumonia and other severe respiratory symptoms.
A retreat in financial markets on Tuesday was followed by a rebound on Wednesday, as investors snapped up bargains.
Share benchmarks were mostly higher, with Hong Kong's Hang Seng gaining 1.1 per cent and the Shanghai Composite index advancing 0.4pc. Japan's Nikkei 225 jumped 0.7pc.
"While the new virus appears much less dangerous than SARS, the most significant risk for Asia could lie ahead as the regional peak travel season takes hold, which could multiply the disease diffusion,” said Stephen Innes, chief Asian strategist for AxiCorp.
"So, while the risk is returning to the market, the lights might not turn green until we move through the Lunar New Year travel season to better gauge the coronavirus dispersion.”
The 2003 outbreak of SARS in China, along with cases of a deadly form of bird flu, resulted in widespread quarantine measures in many Chinese cities and in Hong Kong.
More than 8,000 people fell sick and just under 800 people died, a mortality rate of under 10pc.
While the ordinary flu kills hundreds of thousands of people each year, such new diseases raise alarm due to the uncertainties over how deadly they might be and how they might spread. That is especially true during the annual mass travel of the Lunar New Year festival, which begins this week.
"The cost to the global economy can be quite staggering in negative GDP terms if this outbreak reaches epidemic proportions as until this week, the market was underestimating the potential of the flu spreading,” Innes said in a report.
In China, health officials have stepped up screening for fevers.
"We ask the public to avoid crowds and minimise public gatherings to reduce the possibility of cross infection,” Li Bin, deputy director of the National Health Commission, said on Wednesday.
Just as with SARS, though, the impact of the disease is likely to fall heaviest on specific industries, such as hotels and airlines, railways, casinos and other leisure businesses and retailers, analysts said.
Most declined on Tuesday but rebounded on Wednesday as investors locked in profits ahead of the Lunar New Year holiday.
The outbreak is a boon, meanwhile, for pharmaceutical companies and makers of protective masks and other medical gear.
"If the pneumonia couldn't be contained in the short term, we expect China's retail sales, tourism, hotel and catering, travel activities likely to be hit, especially in the first and second quarters,” said Ning Zhang of UBS.
"Government efforts to offset the shock would help, but growth will likely rebound less than earlier forecast," Zhang said.
As of Jan 17, the World Health Organisation had not recommended any international restrictions on travel but urged local authorities to work with the travel industry to help prevent the disease from spreading while warning travelers who fall ill to seek medical attention.
The illness is yet another blow for Hong Kong, whose economy is reeling from months of often violent anti-government protests.
The wider concern is China, where the economy grew at a 30-year low 6.1pc annual pace in 2019.
An interim trade pact between Beijing and Washington had raised hopes that some pressure from tensions between the two biggest economies might ease, and the latest data have showed signs of improved demand for exports.
The virus outbreak raises the risk such optimism might be premature.
"According to our analysis of the spread of the SARS virus, which so far appears very similar to 2019-nCoV (the new virus), we expect increased downward pressure on China's growth, particularly in the services sector,” Ting Lu and other analysts at Nomura in Hong Kong said in a commentary.
The growing number of global travelers has contributed to the spread of various diseases in recent years, including Middle East respiratory syndrome, the Ebola and Zika viruses, the plague, measles and other highly contagious illnesses.