2-MIN READ

Coronavirus Jitters Weigh on Asian Markets as Death Toll in China Crosses 1,700 with Over 70,500 Infections

People wearing masks are seen at a subway station in Shanghai, China. (Reuters)

People wearing masks are seen at a subway station in Shanghai, China. (Reuters)

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.

  • AFP
  • Last Updated: February 17, 2020, 11:29 AM IST
Share this:

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.

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 on Friday reported zero growth in the last quarter of 2019.

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 was down 0.6 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.

After dipping at the open, Hong Kong was up 0.7 percent. Mainland China's benchmark Shanghai Composite Index was 1.1 percent higher.

Elsewhere, Sydney fell 0.1 percent, Taipei shed 0.51 percent and Seoul was flat.

China has been praised by the WHO for its transparent handling of the outbreak.

There is still scepticism among the global public, with suggestions that Beijing may be hiding the true extent of the virus the way it did during the 2002-2003 SARS epidemic.

But investors have been betting that central bank action — particularly in China — will counter the economic impact of the virus and have positive knock-on effects for emerging markets.

"If the Chinese economy does recover and you've added all this fiscal and monetary stimulus into it as well, the situation could be that you have much stronger emerging markets into the second half" of the year, Sunny Bangia, a fund manager at Antipodes Partners, told Bloomberg TV in Sydney.

"A lot depends on how this virus gets contained and if it can morph into something more minor." China is the world's biggest importer and consumer of oil, and crude prices have been particularly sensitive to the epidemic.

Global oil demand will suffer its first quarterly drop in a decade as the virus lashes China's economy and its impact ripples throughout the world, the International Energy Agency warned last week.

The main contracts have reacted mildly to the news. Brent Crude slipped 0.2 percent and West Texas Intermediate was flat.

Share this:
Next Story

India

  • Active Cases

    3,981

     
  • Total Confirmed

    4,421

     
  • Cured/Discharged

    325

     
  • Total DEATHS

    114

     
Data Source: Ministry of Health and Family Welfare, India
Updated: April 07 (09:00 AM)
Hospitals & Testing centres

World

  • Active Cases

    986,234

     
  • Total Confirmed

    1,347,235

     
  • Cured/Discharged

    286,234

     
  • Total DEATHS

    74,767

     
Data Source: Johns Hopkins University, U.S. (www.jhu.edu)
Hospitals & Testing centres