HONG KONG: Asian investors shifted cautiously Wednesday after the previous day’s sharp losses but they remained on edge after a deadly virus from China was confirmed to have spread to the United States.
Global equities have taken a severe hit by fears the new outbreak, which has killed nine and sickened hundreds, could cause as much economic damage as the SARS epidemic that killed 650 people in 2003.
Shanghai dived more than one percent in early trade, extending the previous day’s 1.4 percent drop, with authorities battling to contain the coronavirus strain as China prepares for the Lunar New Year holidays when millions of people travel across the country.
Officials warned Wednesday the strain could mutate and spread.
Tourism-linked firms were among the worst hit again, with dealers fretting about the impact on the global economy just as it shows signs of a tentative recovery from a long-running slowdown.
After a sell-off in Asia on Tuesday, news that the US had reported its first case hit Wall Street with the Dow and S&P 500 sinking from record highs.
Fears of a bigger outbreak rose after a prominent expert from China’s National Health Commission confirmed Monday that the virus can be passed between people.
The World Health Organization will hold an emergency meeting later Wednesday to determine whether to declare a global public health emergency over the disease, which has also been detected in Thailand, Japan, South Korea and Taiwan.
Worse than SARS?
“While it is still early days, there is a risk that any outbreak could depress consumer sentiment and spending, including tourism as well as travel and transport related business,“ said National Australia Bank’s Rodrigo Catril.
“In addition to the sad and devastating human cost, (SARS) also had an economic impact with epicentres such as Hong Kong enduring a short-lived recession.
“This time the epicentre is in China, so the economic growth impact could be more severe.”
Markets across Asia ended Tuesday sharply lower but most managed to edge up in early trade Wednesday.
Tokyo added 0.5 percent by the break, while Hong Kong added 0.6 percent following a 2.8 percent plunge the previous day.
Sydney rose 0.8 percent and Seoul gained 0.4 percent with Wellington and Jakarta also up. Singapore and Manila were in the red.
The growing crisis has jolted investors who had been enjoying a broadly upbeat start to the year thanks to the China-US trade pact, signs of an improving world economy, easing Brexit woes and looser central bank monetary policy. -AFP