Seoul Witnesses sharp drop across Asian equity markets

Syed Umarullah HussainiWeb Editor

24th Feb, 2020. 10:56 am
Seoul

Seoul witnessed sharp drop across Asian equity markets Monday as South Korea announced a surge in COVID-19 infections,

While oil plunged and safe haven assets in Seoul markets rallied on growing concerns about the global spread of the deadly virus.

With outbreak showing little sign of easing investors increasingly concerned it could have a much longer term impact on the world economy, which was already stuttering, with a number of companies warning about their bottom lines.

Traders broadly optimistic that the virus that killed nearly 2,600 and infected 80,000 contained outside China.

But a spurt of infections and deaths in other countries including South Korea, Italy and Iran has fanned fears of a wider outbreak.

“While the coronavirus is probably slowing in China, it is speeding up elsewhere,” Charles Gillams, at RJMG Asset Management, said.

“Its impact on Chinese business is already deep. So, whether that has a one economic quarter impact of some severity or is a bigger issue remains unclear and indeed we won’t know for while.”

Coronavirus Cases in Seoul

On Monday, South Korea reported 161 more cases, taking its total to 763 and making it the world’s worst hit country outside China, with seven people now dead.

President Moon Jae-in has raised the virus alert to the highest “red” level, in a bid to strengthen the government response to the spiraling outbreak.

News of the spread hammered the KOSPI, which sank more than 3% in early trade, with market heavyweight Samsung diving 3.4 percent.

The won fell 0.7 percent and is sitting at a six-month low.

Hong Kong shed 1.5 percent, with Sydney and Manila each dropping more than two percent. Shanghai, Taipei, Wellington were all off more than one percent. Singapore and Jakarta were off around 0.6 percent apiece.

The losses tracked a sell-off on Wall Street, where the S&P 500 and Nasdaq each gave up more than one percent, while US 30-year Treasury yields hit an all-time high, indicating a rush into the safe havens.

Chinese President Xi Jinping said the epidemic was the “largest public health emergency” since the founding of the People’s Republic in 1949 and admitted authorities must learn from “obvious shortcomings exposed” during its response.

Beijing will decide later in the day whether to postpone its annual parliament session for the first time since the Cultural Revolution owing to the epidemic.

Meanwhile, Italy has introduced severe containment measures previously seen only in China, with more than 50,000 people in about a dozen northern Italian towns told to stay home.

The virus, which has infected at least 152 people and left three dead, has also led to the cancellation of several shows at Milan Fashion Week and the early closure of the Venice Carnival.

“Of all the alarming aspects of the rapidly spreading virus out Wuhan is that it’s showing up in patients with no connection to China or the city of Wuhan, ground zero for the outbreak,” said AxiCorp’s Stephen Innes.

This, he added, suggested “things are about to get extremely problematic, and market conditions could get exponentially worse this week”.

Seoul – KOSPI: DOWN 3.1 percent at 2,096.69

Shanghai – Composite: DOWN 1.5 percent at 26,905.37

Hong Kong – Hang Seng: DOWN 0.9 percent at 3,013.37

Tokyo – Nikkei 225: Closed for a public holiday

Brent Crude: DOWN 3.3 percent at $56.60 per barrel

West Texas Intermediate: DOWN 3.0 percent at $51.77

Gold: UP 1.2 percent at $1,663 per ounce

Dollar/yen: DOWN at 111.55 yen from 111.57 yen at 2200 GMT

Euro/dollar: DOWN at $1.0830 from $1.0843

Pound/dollar: DOWN at $1.2948 from $1.2964

Euro/pound: UP 83.64 pence at 83.61 pence

New York – Dow: DOWN 0.8 percent to 28,992.41 (close)

London – FTSE 100: DOWN 0.4 percent at 7,403.92 (close)

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