Asian markets mostly down after healthy week, eyes on virus

HONG KONG (AFP) – Asian markets mostly fell yesterday after a week-long rally as investors take profits and assess developments in China’s deadly corona-virus crisis.

Strong United States (US) data, Chinese financial support and a broadly healthy earnings season have provided a much-needed boost to equities after last week’s sell-off, while there is a sense that the economic impact of the outbreak globally could be limited.

China’s decision on Thursday to halve tariffs on USD75 billion of US goods as part of their trade detente has also cheered the mood.

Observers said the virus, which has killed more than 600 people and infected 31,000, will batter Chinese growth in the first quarter but it could rebound later in the year, as it did after SARS.

“If the pattern of the SARS impacts are a guide, there is potential for the Chinese economy to rebound with an above-potential growth rate once the outbreak subsides,” said T Rowe Price Analyst Chris Kushlis.

“In 2003, China’s growth rate climbed to 15.5 per cent in the third quarter as pent-up demand saw consumption rebound as the SARS outbreak waned. A similar rebound following the coronavirus could help keep the longer term track of the Chinese economy on a relatively even keel.”

Heading into the weekend, dealers were taking a step back after the week’s strong gains across the world, which has seen all three main indexes on Wall Street chalk up record highs.

Hong Kong, which has climbed around 4.5 per cent this week, dipped 0.3 per cent, while Tokyo eased 0.2 per cent.

Singapore and Taipei both fell more than one per cent, while Seoul slipped 0.7 per cent, Sydney shed 0.4 per cent and Mumbai eased 0.5 per cent. Manila and Bangkok were flat.

However, Shanghai added 0.3 per cent to extend a rebound to four straight days as it recovers from a near eight per cent drop suffered on Monday, when it reopened after the Lunar New Year break.

The gains have been greatly helped by central bank cash injections into the financial market, while there is speculation that government agencies are also buying up shares to prevent a rout.

Stephen Innes, of AxiCorp, said that while the virus outbreak seems to be stabilising in the epicentre of China’s Hubei province, “the disruption to China’s economy will likely continue in the short term”.

A man walks past an electronic stock board showing Japan’s Nikkei 225 index at a securities firm in Tokyo. PHOTO: AP