Ring o’ Roses
In Albert Camus’ novel La Peste, a fictitious city in North Africa is quarantined due to an outbreak of deadly bubonic plague. Authorities dictate that newspapers rally the populace with the (fake) news that the pestilence is under control.
If the novel was set today, it would be impossible to believe government could attempt to contain such a story. The news of the spread of Covid-19 across the globe has been inescapable and escalated to intense levels this week.
Contagious diseases are frightening because they are strange and unpredictable. There may also be a primeval fear to the reaction of an unseen risk, with roots in the folk memory of the bubonic plague, founded on extreme superstition.
A Time Magazine study demonstrated there were 23 times more articles in English-language print news covering the coronavirus outbreak in its first month compared to the same time period for the Ebola crisis in 2018. The speed with which the news of the current outbreak spread has been much more prominent in media than recent epidemics.
Has the media reaction been greater this timedue to the exponential intensity and reach of social media? Has the subsequent stock market, social, corporate and government reaction been encouraged by a sense of public panic and fear, fuelled by online news churning out stories to ‘feed the media beast’?
As the outbreak intensified, social media stories were re-hashed on news outlets: first person accounts from people on the front lines – from the American in Wuhan documenting his personal quarantine story to the British couple on board the Diamond Princess and their video diaries being regularly reported in mainstream press.
Such stories often used the words ‘fear’ and other frightening language: many used the phrase “killer virus”. One article last week in The Telegraph was typical of this fear-inducing language, in describing scenes on the ground in Wuhan containing “hundreds of fearful citizens linking cheek by jowl”.
Tabloid papers such as The Sun and The Daily Mail, were more likely to use words which invoked alarm: The Sun’s coronavirus liveblog routinely refers to the virus as a “deadly disease”, although the paper has modified its tone in recent days.
As cases started to be reported in Europe and the US, was it any wonder then that this week the equity markets have been in full-on melt-down, far greater than a reasonable projection of future economic fall-out. The FT’s Martin Sandbu points out however, that there would have to be a permanent rather than a temporary drop of around 10% of company earnings to reflect the recent sharp sell off.
China’s greater global connectivity, dominance in supply chains and commodity demand is real but the virus may now be the manifestation of a world already rejecting globalisation. It may accelerate the trends already prevalent around immigration controls and shorter supply chains.
For companies, undue pessimism in forecasting future losses may be better served by thoughtful, credible responses to the outbreak, prioritising employee welfare. Apart from in the case of airline stocks.