Nikkei 225, KOSPI, SET Index in post-virus slump

As fear and uncertainty surrounding the unfolding China coronavirus grows, Asian markets – the epicentre of the contagion – have found themselves hardest hit, with major benchmarks suffering steep losses in the week’s first two days of trading.

While short-term impact is expected, IG Asia Market Strategist Pan Jingyi writes that based on the experience of the SARS coronavirus in 2003, regional markets could see ‘see impact linger for a longer duration than the west going by the current state of the virus spread’.

Almost every component on Japan’s Nikkei 225, Thailand’s SET Index, and South Korea’s KOSPI has been negatively impacted by the plague, with travel and tourism stocks undoubtedly driving most of the selling momentum.

With the Chinese markets closed for Chinese New Year until 03 February, analysts are worried about what the true economic impact of the virus is.

‘Over the weekend you saw more cases,' said Quincy Krosby, chief market strategist at Prudential Financial. ‘That got investors and traders worried that this may be a longer event. The next question is, “What happens to global growth if this does continue and magnify?”’

Japan: Nikkei 225 ↓ 2.9%

Japan’s primary benchmark index Nikkei 225 fell 2.9% in just one full day of trading.

As of 10am on Tuesday (28 January), the index is down to a two-week low of 23,137.989 from the previous week’s close of 23,827.18.

A day earlier on 27 January, travel sector stocks saw share prices descend to new lows – Japan’s largest airline All Nippon Airway Holdings Inc lost 3.02% in share price in early trade to hit a six-month low, while main airport operator Japan Airport Terminal Co. opened 6.9% lower than Friday’s market for a three-month nadir.

The more-focused Topix Index, which measures a more concentrated list of blue-chip firms trading on the Tokyo Stock Exchange, also lowered by 1.64% for the same period.

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Thailand: SET Index ↓ 2.9%

The SET Index, Thailand’s main composite stock market index, also deflated 2.9% from Friday to a four year-low point of 1,524.15 by the end of Monday, 27 January.

The tumble came as the Chinese government banned outbound group tours with effect on Monday, with Tourism and Leisure components unsurprisingly taking the biggest hit.

Mainland Chinese tourists, the largest contributor of all foreign tourism receipts in the country at over 25%, spent almost US$18 billion in Thailand in 2019, according to Thai government data.

National air carrier Thai Airways saw share price plunge nearly 1.7% in late-afternoon trade on the day, before recovering at closing.

Central Pattana, the country’s largest retail property development group which owns CentralWorld mall, experienced as much as a 4.7% drop in share value on the day.

Thai airport operator Airports of Thailand PCL, which manages all six of Thailand’s international airports, opened a massive 4.9% lower on Monday morning.

South Korea: KOSPI Index ↓ 3.17%

Also making its concerns known was the Korea Composite Stock Price Index, which tripped 3.17% to start the post-virus week.

The index opened Tuesday at 2,192.22, its lowest start since 10 January.

National carrier Korean Air Lines led the selling frenzy, opening 8.07% lesser than the last closing on Thursday, 23 January.

Asiana Airlines, the country’s second largest airline, fared even worse, as it lost 9.44% in share price right out the gate.

Lotte Corporation, which owns shopping centres, hotels, amusement parks and entertainment venues all over South Korea, managed a less pronounced drawback of -3.97%.

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