Coronavirus outbreak

S'pore, S. Korea and HK rebound as other Asian markets bleed

STI gains on signs that the virus outbreak here seems to be largely contained

Railway workers in protective gear spraying disinfectant as part of preventive measures against the spread of the coronavirus, at a Seoul railway station yesterday. South Korea's hard-hit Kospi index rebounded 1.18 per cent yesterday.
Railway workers in protective gear spraying disinfectant as part of preventive measures against the spread of the coronavirus, at a Seoul railway station yesterday. South Korea's hard-hit Kospi index rebounded 1.18 per cent yesterday. PHOTO: AGENCE FRANCE-PRESSE

Markets in Singapore, Hong Kong and South Korea enjoyed a relief rebound yesterday even as others in Asia extended losses following a global stock rout stoked by fears that the rapid rise in new coronavirus cases outside China could further dent global growth.

Tokyo led the plunge with a 3.34 per cent loss after reopening yesterday, dragged down by virus fears and the Dow's 1,031-point plunge. Sydney shed 1.6 per cent, while Shanghai lost 0.6 per cent.

But the Straits Times Index gained as much as 0.9 per cent before closing up 0.51 per cent, on signs that the outbreak here seems to be largely contained.

South Korea's hard-hit Kospi index rebounded 1.18 per cent yesterday, while Hong Kong rose 0.27 per cent.

Citi Research analysts said that the slower rate of new cases being uncovered in South Korea and the declining rate of infection in China were the likely drivers.

While it is too early to assess the economic impact of the outbreak in South Korea, DBS economist Ma Tieying warned that a possible delay in production and deliveries among South Korean electronics firms, due to tightening pandemic control measures, could affect Singapore's electronics sector, whose $90 billion output value accounts for about one-quarter of its manufacturing gross domestic product.

South Korea, one of the world's largest producers of semiconductors, memory chips and flat panels, is Singapore's eighth-largest export market, accounting for about 4 per cent of its total exports.

For now, the threat to the electronics supply chain in Asia is limited as the outbreak is "currently confined to Daegu - which accounts for only 5 per cent of the country's population - and the surrounding Gyeongbuk province", said Ms Ma.

"If the outbreak spreads nationwide, resulting in a decline in consumer demand and more serious manufacturing disruptions, the ripple effects on Singapore would be amplified," she added.

The outbreak also temporarily affected Samsung's smartphone plant in Gumi city, but not its semiconductor-making plants in Gyeonggi province, some 150km away, she added.

The smartphone plant was shut down over the weekend after one of its workers was found to be infected, but it reopened on Monday.

The outbreak outside China is generally worsening, but it is a different picture for Singapore.

CMC Markets analyst Margaret Yang said: "The number of new cases here has been just one or two a day, or even none on Feb 23, which suggests the virus is largely contained in Singapore. So local investors are not as panicked, compared with those in US and European markets who are just starting to grapple with the outbreak."

Still, Ms Yang warned that the way the outbreak develops in other countries could impact trade and global growth.

Singapore businesses reliant on South Korean imports of electronics and cars could face some disruption in their supply chain, said Mr Ho Meng Kit, chief executive of the Singapore Business Federation.

With South Korea ranking ninth in terms of international visitorship, Singapore's tourism sector and related industries like retail and food and beverage, and the aviation sector could be further hurt by travel restrictions.

Last year, total trade with South Korea amounted to $39 billion, making the country Singapore's ninth-largest trading partner. Bilateral tourism figures hit 860,000 in 2018, Mr Ho said.

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A version of this article appeared in the print edition of The Straits Times on February 26, 2020, with the headline S'pore, S. Korea and HK rebound as other Asian markets bleed. Subscribe