Asia stocks slide on widening Wuhan virus fallout; STI down 0.6%

A woman walks past a display showing Tokyo's Nikkei stock average on Jan 27, 2020. PHOTO: EPA-EFE

SYDNEY (BLOOMBERG) - Asian stocks slumped to a seven-week low and government bonds rallied on Thursday (Jan 30) amid mounting evidence that the coronavirus epidemic is disrupting the world's second-largest economy.

A slew of companies have suspended some of their China operations for the time being in the effort to contain the disease, and economists have started cutting growth forecasts.

Japan's Nikkei index slid 1.9 per cent while Hong Kong's Hang Seng lost 2.1 per cent. South Korea's Kospi index sank 1.7 per cent and Australia's S&P/ASX 200 Index declined 0.3 per cent.

Taiwan's main stock index sank 5.6 per cent as that market came back from the Chinese New Year holiday.

Its deputy finance minister said on Thursday that the government is not currently planning to call a meeting of its National Stabilisation Fund to intervene in the stock market. China is Taiwan's largest single trading partner, with some 40 per cent of its exports going there, meaning it is vulnerable to any slowdown in the Chinese economy due to the spread of the new virus, which has killed 170 people in China.

In Singapore, the Straits Times Index was down 18.93 points or 0.6 per cent at 3,163.64 as of 1.50pm.

Foxconn's Hon Hai Precision Industry Co - which makes most of the world's iPhones, and has major facilities in China - plunged as much as 10 per cent. Japanese 10-year bond yields hit their lowest level since December and Australian ones slid below 1 per cent.

The death toll from the coronavirus has grown to 170 in China, with the number of infected patients rising to 7,711.

The effects of the virus are already weighing heavily on China's economy and beyond, as more and more companies shut operations or avoid corporate travel and tourists cancel trips.

Various airlines are cutting flights to the country, from British Airways and Lufthansa to Air Canada and American Airlines.

Alphabet Inc's Google said it would temporarily shut all its offices in China and Sweden's Ikea said it had temporarily closed all its stores in the country because of the outbreak of the new coronavirus.

Ikea, Ford and Toyota will idle some of their vast Chinese assembly plants for an extra week. Apple is rerouting supply chains. Starbucks has closed thousands of stores and is warning of a financial blow.

Federal Reserve chairman Jerome Powell on Wednesday said the outbreak of the coronavirus will likely hit the Chinese economy and could spill wider, but it was too early to assess its impact on the US.

Morgan Stanley said on Wednesday the outbreak in China was likely to hurt global growth in the near-term and could shave up to 1 percentage point off China's growth in the first quarter.

Assuming the coronavirus peaks in February or March, global economic growth could be reduced by 0.15 to 0.3 percentage point during the first quarter, the US investment bank said.

"At this point the real impact of the coronavirus depends on how fast the containment of the virus is," Eugenia Victorino, head of Asia strategy at SEB, told Bloomberg TV in Singapore. "There is really a lot of uncertainty and we do not know when the peak of the infections will be."

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