China’s Scary Coronavirus Warning Risks Epic Stock Market Sell-Off

April 28, 2020 7:40 AM UTC
The U.S. stock market saw a 14 percent recovery in April. It is now at risk of a large correction as top Chinese scientists make a dire warning.
  • Top scientists in China claim coronavirus is seasonal, endangering U.S. stock market recovery.
  • Experts become skeptical towards the effectiveness of heat in weakening the virus.
  • Billionaires say investors are not pricing in the worst outcome.

The U.S. stock market saw a 14 percent recovery in April, primarily fueled by optimism surrounding coronavirus testing. It is now at risk of a large correction, as top Chinese scientists warn the virus will return in 2021.

Jin Qi, Institute of Pathogen Biology director at the Chinese Academy of Medical Sciences, said that coronavirus is “very likely” to co-exist with humans for an extended period of time.

Qi stated:

This is very likely to be an epidemic that co-exists with humans for a long time, becomes seasonal and is sustained within human bodies.

If the coronavirus pandemic comes back in seasonal spurts, it may trigger big downtrends in the stock market throughout this year.

Summer Can’t Kill Coronavirus

When scientists say coronavirus could be a seasonal epidemic, it simply means heat is not enough to kill the virus during the summer.

Governments around the world like the U.K. and the Philippines initially predicted the coronavirus peak to be achieved in the summer season.

The U.S. stock market reacted positively to optimistic data in early April, as a result.

The U.S. stock market rebounded strongly in April | Source: Yahoo Finance

But, scientists are now skeptical about the effectiveness of heat in defeating coronavirus. White House immunologist Dr. Anthony Fauci said on April 9 that “a change in the weather” is unlikely to slowdown the virus.

Fauci said people must assume “the virus will continue to do its thing,” as he dismissed the idea of relying on the change in weather to slow the spread of coronavirus.

COVID-19 is Likely Seasonal

The inability of heat to reduce the strength of coronavirus carries strong implications. It probably means that the virus is likely to be seasonal and return every year after 2020.

Wang Guiqiang, head of infectious diseases department at Peking University First Hospital was quoted by Bloomberg as stating:

The virus is heat-sensitive, but that’s when it’s exposed to 56 degrees Celsius for 30 minutes and the weather is never going to get that hot…So globally, even during the summer, the chance of cases going down significantly is small.

In the U.K. and the U.S., the hottest summer season peak is estimated to be 38 degrees Celsius. The data shows that summer is not sufficiently hot to impact coronavirus.

U.S. Stock Market Isn’t Pricing In the Worst Outcome

There still are a large number of uncertainties regarding the virus that researchers are unable to clarify.

Whether a vaccine for COVID-19 can be made when no vaccine was found for any coronavirus in the past is still unpredictable.

Despite the variability surrounding the coronavirus pandemic, billionaire investor Mark Cuban said investors are not pricing in the worst scenarios.

Cuban said that he does not believe investors are “factoring in what we are going to see on the other side,” reaffirming his cautious stance in the near-term.

U.S. surpasses 1 million coronavirus cases as the current epicenter of the global pandemic. | Source: Worldometers

The U.S. stock market rebounded by 29% since March 23. But, the U.S. recorded a million coronavirus cases and pharma giants are nowhere close to finding a vaccine.

Billionaires are hedging their assets into cash as they fear the stock market to correct in the second quarter of 2020. Based on the negative projections about the virus, stocks are vulnerable to a sharp drop-off.

Samburaj Das edited this article for CCN.com. If you see a breach of our Code of Ethics or find a factual, spelling, or grammar error, please contact us.

Last modified: June 24, 2020 1:03 AM UTC

@iamjosephyoung

Financial analyst based in Seoul, South Korea. Contributing regularly to CCN and Forbes. I have covered the stock market and bitcoin since 2013. Joseph Young is a Trusted Journalist. Visit his MuckRack profile here. Reach him on Twitter or LinkedIn.