What 4 key countries have done to contain the coronavirus impact

An exponential problem

As the coronavirus (Covid-19) spreads across the globe, governments are taking extraordinary measures to contain the virus.

Even so, the spread of the virus has continued at an alarming rate: all up, there are currently 198,166 total cases and 7,965 reported deaths stemming from the virus.

With this in mind, below we examine the differing government responses from the United States, Australia, Italy and China; as well as look at the diverse share market impact from the Covid-19 outbreak.

China – 80,881 cases

The Chinese government acted decisively in the face of the coronavirus threat, suspending flights, cancelling trains, blocking roads and putting entire cities into lockdown as a means of curbing the spread of the virus.

According to the New York Times, approximately 760 million people were told to stay home, at one point. Yet now, even as the rate of Covid-19 cases slow, according to CNN, millions remain confined to their homes.

Interestingly, unlike many other countries, China appears reluctant to issue any kind of stimulus package, economic or otherwise.

Indeed, in response to the US Fed’s recent interest rate cuts, according to FT, one advisor from a Chinese Central Bank said:

‘Liquidity seems to be broadly ample and the financial plumbing continues to function. You don’t want to go beyond that.’

Mind you, while the Chinese government are yet to announce an official stimulus package in response to Covid-19, this is not to suggest that economic activity remains flat. Rather, according to the South China Morning Post:

‘At least seven of 31 Chinese provinces have published long lists of investment projects in the last two months, with a combined investment of around 25 trillion yuan (US$3,6 trillion), including 3.5 trillion yuan (US$500 billion) for 2020.’

Finally, and compared to other stock markets around the world, China’s CSI 300 index has held up surprisingly well, dropping just 8.57% or 347 points – in the last month.

Italy – 31,506 cases

Like China, as the coronavirus rapidly spreads through Italy, the government has enacted a number of emergency measures.

Centrally, the Italian government has asked people to stay inside their homes, and to only travel for work and other necessary reasons; large community gatherings have also been suspended, educational institutions closed, and a number of travel restrictions have been imposed.

Besides those measures, Italy’s government recently approved a 25 billion euro stimulus package aimed at combating the health and economic impact of the coronavirus.

According to Bloomberg, this stimulus package includes:

‘3.5 billion euros in spending for the health sector, state underwriting for a portion of companies’ property rental costs, subsidies for the self-employed and a nine-month mortgage relief plan for self-employed and other non-salaried workers who’ve seen their earnings fall by more than a third during the virus crisis.’

In response to the virtual shutdown of Italy’s economy, the FTSE MIB – Italy’s main market index – has fallen sharply in the last month, shedding over 10,000 points or approximately 40%.

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Australia – 452 cases

In response to the coronavirus crisis, the Australian government announced a hefty $17.6 billion stimulus package, primarily focused on helping those in the lower-income bracket.

As part of that stimulus package approximately 6.5 million Australians, including pensioners, Newstart recipients and those on Youth allowance will receive a one-off cash payment of $750.

Besides helping lower-income earners, the stimulas package will support business investment, assist small and medium sized businesses with cash flows, and provide 'targeted support for the most severely affected sectors, regions and communities.'

Commenting on the stimulus package, Prime Minister Scott Morrison said:

'Just as we have acted decisively to protect the health of the Australian people, based on the best evidence and medical advice, our support package responds to the economic challenges presented by this pandemic in a timely, proportionate and targeted way.’

More broadly speaking, the Australian government advised that citizens should not travel abroad and that large public gatherings have been banned.

Turning to corporate Australia, the government yesterday announced a relief package totalling $715 million for Australian airlines.

Overall, the coronavirus has had a significant impact on the Australian stock market: In the last month alone the ASX 200 has fallen over 25%.

The United States – 6,439 cases

Emblematic of the broader panic surrounding the spread of the coronavirus, the city of New York has implemented some of the most extreme measures in the whole of the US.

Large gatherings have been banned, Broad Way has been shut down, the same goes for museums and sports venues; casinos, gyms and cinemas all must close from 8pm onwards; schools however will remain open.

‘As soon as we can go back to normal we’ll go back to normal,’ said New York’s Mayor, Bill de Blasio.

More broadly speaking, reports have started trickling out that the US government is on the verge of approving an economic stimulus package worth as much as US$1 trillion.

Speaking of this potential stimulus package, Steven Mnuchin, the United States Secretary of the Treasury, said:

‘This is a combination of loans. This is a combination of direct checks to individuals. This is a combination of creating liquidity for small businesses.’

Other guidelines that the US Government has suggested in recent weeks to combat the spread of the coronavirus include: avoiding social gatherings, limiting unnecessary travel; as well as avoiding bars, restaurants and food courts. According to CNN, recent guidelines ‘also suggest closing schools and cancelling all social visits in homes.’

Besides economic stimulus and social guidelines, the US Federal Reserve has moved decisively from a monetary policy perspective, slashing interest rates to near zero in the hopes of stimulating economic growth.

Yet even with the Fed’s bold moves in play, US equity markets have still faced vicious selling pressure in the last thirty days. In the last month the Dow Jones index, NASDAQ, and S&P 500 have all crashed approximately 30%.