Virus jitters weigh on Asian markets

18 February, 2020 12:00 AM printer

HONG KONG: Fears about the economic fallout from the new coronavirus weighed on Asian markets Monday as the death toll in China from the epidemic rose and infections topped 70,500.

After Wall Street’s muddled performance on Friday and US markets closed Monday for a holiday, traders turned their attention to grim economic news in the region, reports AFP.

Japan’s economy suffered its worst quarterly contraction in more than five years, while Singapore cut its growth forecast for this year as the virus batters the city-state’s tourism and trade.

That comes after Europe’s largest economy Germany reported Friday zero growth in the last quarter of 2019 and warnings from the International Monetary Fund that the virus could damage global economic activity this year.

While investors are comforted by a slowdown in new infections outside hardest-hit Hubei province in recent days, they might be less sanguine if China’s economy takes a worse-than-expected hit, said Stephen Innes of AxiCorp. “If it comes out bad enough for confidence to plummet, investors could quickly find themselves up the creek... without a paddle,” Innes said in a commentary.

“Financial markets are not known for their rational thinking lately and given the 500 million or so mainlanders affected by the (COVID-19) quarantine... it’s also not hard to come up with more downside risks than upside ones right now.”

A spokesman for China’s national health authority said the slowdown was a sign the outbreak was being controlled.

However, World Health Organization chief Tedros Adhanom Ghebreyesus has warned it is “impossible to predict which direction this epidemic will take”.

Tokyo’s benchmark Nikkei 225 index closed down 0.7 percent after the economy shrank 1.6 percent in the three months to December from the previous quarter, even before the novel coronavirus outbreak in China hit Japan, official data showed.

“Concern over the virus is only intensifying and the mood of self-restraint is going to spread more broadly. I’m becoming downbeat on Japan’s economy,” Takashi Shiono, an economist at Credit Suisse Group, told Bloomberg News.

Mainland China’s benchmark Shanghai Composite Index closed up 2.3 percent after the central bank announced measures aimed at cushioning the economy against the health crisis.