You will have plenty to read on this subject. But this does scare me:

Chinese financial shock gathers steam as world holds its breath on coronavirus

A major slowdown in China could trigger recession and defaults in other parts of the world

By Ambrose Evans-Pritchard

https://www.telegraph.co.uk/business/2020/02/07/china-contract-europe-near-recession-world-holds-breath-coronavirus/

Eoin Treacy's view

Thank you for this article which highlights the acute risk to market, particularly in Europe, which rely on Chinese demand. That is as true of the automotive sector as it is of luxury goods. Here is a section:

The disturbing feature is that the European Central Bank’s emergency rate cut and renewed quantitative easing in September have gained so little traction. While it was not literally the ECB’s ‘last throw of the dice’ there is precious little left to play with.

There must now be a serious risk that China’s coronavirus crisis - if prolonged - will push Germany, Italy, and perhaps France into a technical recession, and in so doing expose both the ECB’s credible limits and the eurozone inability to launch meaningful fiscal stimulus under its deflationary ideology and spending laws.

Markets have not yet looked so many moves ahead on the global financial chess board but they might do so within two or three weeks if the corona fever is not broken, and traders tend to shoot first and ask questions later once fear takes hold.

Everything depends on the spread rate and the doubling rate, 2.68 per case and 6.4 days respectively, according to a Lancet study last week. If these figures improve markedly (and can be believed), the storm should blow over. If they do not materially change, the global recessionary dynamic may become unstoppable within weeks.

This graphic courtesy of Deutsche Bank highlights the fact that the number of new “official” cases peaked a couple of days ago. We do not yet know if that is a peak or the peak. The number of cases appearing overseas continues to increase and the rate of infection inside hospitals is also worrying. Nevertheless, if the pace of new infections is peaking that suggests the threat to manufacturing can be contained beyond the current quarter which is likely to represent contraction risk.

If this is merely a pause before a further hike in the number of cases then the likelihood of more severe economic stress will go up a notch. As I wrote yesterday, the ability and willingness of workers to travel back to their employer’s locations over coming weeks will be the deciding factor in how severe the economic impact will be.

The important thing to remember is that regardless of how severe and expensive this virus is to contain, once the peak in infections is confirmed the low for investor expectations of future potential tends to arrive soon after.

Meanwhile I am not convinced we are going to see the wave of bankruptcies discussed in the above article. The Chinese government is actively supply liquidity and extending favourable terms to all borrowers which will be include payment holidays if that is necessary. With the Federal Reserve signalling a threat to growth, the chances of liquidity contracting are close to zero which is supportive of asset prices overall.