As the Chinese leadership uses it power to try to stop the coronavirus contagion, does this horrible event offer a test of Barro's 2006 QJE paper? As I understand his paper, asset prices reflect the fact that there is a positive probability of large drops in a nation's output. To compensate investors for such low probability but dangerous risk, there has to be an equity premium (i.e the rate of return on stocks versus safe bonds).
Here is a graph of the last 12 months of the Shanghai Index. The index has fallen around 10% since early February 2020. Is this an accurate representation of the expected present discounted value of lost future profits for Chinese firms going forward?