Asia shares track global rout as coronavirus pandemic fears grow

SINGAPORE (ICIS)–Asia’s stock markets plunged on Friday, tracking the overnight rout in global bourses, as worries grow over a possible worldwide coronavirus pandemic that could cripple economic growth.

At 03:15 GMT, the Hong Kong Hang Seng Index was down by 2.35%; the Korea Stock Exchange KOSPI Index fell by 2.47%; and Singapore’s benchmark Straits Times Index declined 2.30%.

Japan’s Nikkei 225 Index fell by 3.48% on growing fears that the 2020 Olympics scheduled in July-August could be called off because of the spread of the coronavirus.

In Malaysia, the FTSE Bursa Malaysia KLCI Index was down by 1.50% as the country is also dealing with growing political uncertainty following the resignation of Prime Minister Mahathir Mohamad earlier this week.

Mahathir, who was asked to stay on in his post until a successor is named, announced on Thursday a Malaysian ringgit (M$) 20bn stimulus package to combat coronavirus-related economic fallout.

“We think the measures are encouraging from aspect of assistance to hardest hit sectors, affected individuals, stimulating private spending, and promoting investments,” said Singapore-based UOB Global Economics & Markets Research.

A special parliamentary session in Malaysia will be held on 2 March to select the country’s next prime minister. A snap election will be called if the meeting is inconclusive.

Meanwhile, shares of petrochemical firms in Asia have also slumped on Friday, with Japan’s Mitsubishi Chemical down by 2.59% and Asahi Kasei plunging by 3.69% in Tokyo.

In Hong Kong, Sinopec Shanghai Petrochemical was down 2.11% and Petrochina slumped by 2.22%.

In Seoul, shares of South Korean producers were also falling, with LG Chem down by 3.99% and SK Innovation down by 2.58%.

In southeast Asia, Malaysian producer PETRONAS Chemicals Group (PCG) fell by 2.24% in Kuala Lumpur, while oleochemicals maker Wilmar was down by 1.93% in Singapore.

Overnight in the US, the Dow Jones Industrial Average posted its largest single-day point drop in history when it fell by 4.4%, slumping into correction territory alongside the S&P500, while the NASDAQ tumbled by 4.6%.

The US Centers for Disease Control and Prevention on Thursday confirmed the first case of the new coronavirus (Covid-19) in the US with no travel history, raising the risk of a community spread.

Globally, the number of coronavirus cases now stand at around 83,000, with almost 79,000 of those in mainland China.

South Korea has the second-highest number of confirmed cases at 2,022.

The novel coronavirus is believed to have emerged late last year in Wuhan, the capital of Hubei province in central China.

World Health Organization (WHO) director general Tedros Ghebreyesus had said on 26 February that new cases of coronaviruses reported in countries outside of China has now exceeded the number of new cases reported within China for the first time.

Based on “evidence from China’s consumption demand, supply chain disruptions … and a still-elevated fear factor in many Asian countries, we believe the hit to Asia’s growth in Q1 is likely to be significant”, said Japan’s Global Markets Research in a note.

There are indications that the growth slowdown will spill over into the early part of the second quarter on a delayed pick-up in Chinese production, continued travel restrictions and an elevated public fear factor, which will impinge on vulnerable services sectors, Nomura said.

“We have lowered our Q1 GDP growth forecast for Asia excluding Japan to 3.1% (year on year) from 5.0% in Q4, and we expect full-year GDP growth of 4.9% in 2020,” it added.

Focus article and interactive by Nurluqman Suratman

Photo: A staff member handles nucleic acid testing samples at a novel coronavirus detection laboratory in Wuhan, Hubei province in central China. (Photo by CHINE NOUVELLE/SIPA/Shutterstock)

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