Asia stocks opened to the downside Tuesday even as the coronavirus outbreak appeared to be slowing. Economists were predicting a hit to growth in Asia regardless of the improvement in the fight against the virus.
China’s first-quarter gross domestic product may fall 2.5% from the fourth quarter of 2019 following the pause in economic activity caused by the coronavirus outbreak, Capital Economics estimates and warns that “a prolonged shutdown could mean lost output is never recovered.”
The economic disruption is starting to spread to neighboring economies through supply chains, it says. CE notes that imports to Korea during the first ten days of this month fell by nearly 50% on year, the biggest fall since Asian financial crisis in 1997 and larger than the drop experienced at the height of the global financial crisis.
Asian currencies were also falling against the dollar amid concerns over the economic impact from the coronavirus outbreak. Investors could remain cautious about adding more currency risk before assessing the depth of the economic fallout, AxiCorp says.
The first data that may provide a “barometer” of how the month is panning out could be South Korea’s 20-day exports due on Feb. 21, AxiCorp adds. USD/SGD is up 0.1% at 1.3911, USD/CNH is up 0.2% at 6.9966 and USD/THB is up 0.2% at 31.25.
Japan’s Nikkei index and Hong Kong’s Hang Seng were bearing the brunt of earl day declines, with the Nikkei NIK, -1.50% off 1.2% and the Hang Seng HSI, -1.43% down nearly 1.4% in early trades. Stocks in China 399106, +0.52%SHCOMP, -0.25% were off about one-half a percent.
An example of the economic impact resulting from the coronavirus scare: China’s biannual auto show, one of the industry’s biggest international events, is being postponed in response to the continuing spread of a new virus.
The organizers of Auto China 2020 said in a statement dated Monday that the sprawling event originally scheduled for April 21-30 in Beijing would be moved to an undetermined date. The Auto China show has taken on increasingly heft as global manufacturers seek to grow their sales in China’s massive, but recently slowing, market for cars, trucks, vans and luxury vehicles.
The story was compiled from Dow Jones Newswires and Associated Press reports.
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