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The Wuhan coronavirus has infected nearly 10,000 people in China and killed 213. To contain the outbreak, national holidays were extended, stores were closed, public events were canceled, and travel plans and movie screenings were delayed. The economic repercussions can’t be ignored, and are reflected in the falling stock prices around global markets.

Stock markets in China were closed for the Lunar New Year holiday, but trading in exchange-traded funds continued. iShares MSCI China (ticker: MCHI) has declined 11% since Jan. 17, while iShares MSCI World (URTH) and iShares MSCI USA Equal Weighted (EUSA) have both lost more than 3%.

During the SARS epidemic in 2003, China’s gross-domestic-product growth fell to 0.8% in the second quarter of 2003 from 2.9% in the first quarter, before bouncing back to 3.7% in the third quarter. Retail sales fell 4%, and air-passenger traffic plunged by 70%-80% for tourist-heavy economies such as Hong Kong, Taiwan, and Singapore, according to Robert Buckland, an equity strategist at Citigroup.

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Asian stocks were hit the hardest and continued to sell off in March 2003, even as markets elsewhere recovered. Indeed, Asian equities didn’t bottom out until new cases of infection peaked in late April. Cyclical sectors sold off the most, while defensives held up better. Some of the hardest-hit industries included airlines, hotels, restaurants, and banks.

We should see a similar pattern this time. Citigroup economist Li-Gang Liu expects China’s GDP growth to slow down to 4.8% in the first quarter of 2020, and has cut his forecast for the full year to 5.5% from 5.8%. The outbreak is expected to peak in March, Citi strategists estimate, and Asian equity markets are likely to keep falling until there are signs infections are leveling out.

Yet a China slowdown this time around will have a much bigger impact on the world economy than during the SARS outbreak in 2003. The Chinese economy made up only 4% of global GDP back then. Now, it is 17%.

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In the U.S., the coronavirus outbreak comes when stocks have been rallying for most of the past year and hitting new highs. According to a market sentiment indicator from Citigroup chief U.S. equity strategist Tobias Levkovich, the U.S. market has entered euphoric territory and investors should exercise some short-term caution.

The stock market was already due for a pause, and the coronavirus has proven to be the catalyst. Some might worry that the latest dip could mark the beginning of the next major bear market, but Citi’s economists think it’s still too early to make the call. Out of the bank’s 18 economic indicators, only five have turned red—the most for the current cycle, but still not enough to make a bearish call.

Instead, the coronavirus-triggered selloff might present a good opportunity to buy the dip. Global equities will likely track the growth of earnings to post about a 4% gain in 2020, according to Buckland, and that means any further drop in prices would make expected returns more attractive.

Buckland argues that it might be time to hunt for some bargains. His team has put together a list of large-cap developed-markets stocks that generate at least 15% of their sales from China. Stocks in the list, including 25 U.S., 19 European, and 16 Japanese companies, performed strongly in 2019, rallying 36.6% for the year as the MSCI World benchmark gained 25.2%. They have recently underperformed, falling 4.6% since Jan. 17.

These stocks could be vulnerable if worries around the coronavirus and Chinese economy escalate, and should remain under pressure until the outbreak is brought under control. That makes them a good buy. Many of the listed names are in the semiconductors, autos, and tech hardware sector, including Apple (ticker: AAPL), Intel (INTC), Nvidia (NVDA), TE Connectivity (TEL), and Western Digital (WDC).

Write to Evie Liu at evie.liu@barrons.com