Welcome to Thoughts on the market. I'm Jonathan Garner, Chief Asia and Emerging

Markets Equity Strategist. Along with my colleagues in the US and Europe bringing

you their variety of perspectives, I'll be providing input on this large growing

and increasingly complex part of the global economy. It's Friday, January 31st

at 9 a.m. in New York. The big story in Asian economies and markets this month is clearly the outbreak of a novel coronavirus in Central China.

The human impact is considerable, not just on those suffering from the virus but across the region.

It's led to major travel restrictions in China and beyond as

well as factory and retail closures beyond the usual Lunar New Year shutdown.

And unfortunately it's not the first situation of this sort. To understand the outbreak and its impact more clearly,

it's helpful to look back at the SARS outbreak in 2002 and 2003. SARS was first reported in

November 2002 and over the following few months the illness spread from China to more than two dozen countries in Asia, North America, South America and Europe before the virus was contained by mid 2003.

Following the outbreak, travel and retail activity

in China dropped considerably with a subsequent impact on GDP growth,

but the drop was temporary and trends recovered

over the course of a few months.

These same near-term risks to China and global growth could be present with this outbreak.

And we should also bear in mind that the Chinese economy is much larger and more connected with the global economy than it was at the time of SARS.

According to our global economics team and as Andrew Sheets mentioned yesterday,

if the outbreak peaks in February to March, China's growth rate in the first quarter could be reduced by a half to one percentage

point, but should recover thereafter thanks to restocking demand and government policies such

as infrastructure investment and tax exemptions for affected sectors.

If, however, the peak comes in three to four months, growth in the first half of the year could

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