The stock market fell Monday along with the rest of Asia on fears over the global economic impact of a deadly new SARS-like virus.
The Philippine Stock Exchange Index dropped 35.78 points, or 0.5 percent, to 7,587.63 on a value turnover of P4.3 billion. Losers overwhelmed gainers, 119 to 69, with 43 issues unchanged.
Casino operator Bloomberry Resorts Corp. sank 4.4 percent to P9.87, while Metro Pacific Investments Corp., which is into toll roads, water and electricity generation, hospitals and infrastructure, declined 3.3 percent to P3.24.
Manila Electric Co., the biggest retailer of electricity, fell 2.8 percent to P294, but online gaming operator PhilWeb Corp. jumped 8.7 percent to P4.12.
Oil prices, meanwhile, plunged more than two percent on Monday to extend last week’s sell-off, while safe-haven assets including the yen and gold rallied.
Most regional markets were closed for the Lunar New Year break, but Tokyo was open and fell two percent. Bangkok plunged nearly three percent on worries about the Thai travel sector, while Mumbai, Wellington, and Jakarta also suffered losses.
Both main oil contracts tumbled more than two percent, having dropped more than six percent last week owing to concerns about the effects on demand in the world’s number two economy.
As the death toll from the Chinese epidemic jumped to 80 with those affected worldwide approaching 3,000, analysts said there were growing fears the crisis could become as bad as the Severe Acute Respiratory Syndrome (SARS) outbreak that hammered Asian markets in 2003.
The outbreak of the coronavirus has led China to lock down the epicenter of the disease, Wuhan—a city of 11 million people—while imposing tight travel restrictions on a number of other cities including Beijing.
The move comes during the Lunar New Year holiday when hundreds of millions of people criss-cross the country and spend billions of dollars.
The government decided late Sunday it would extend the holiday and related school closures beyond January 30 end date to “reduce population flows,” state media said.
The outbreak has led to the cancellation of festivities, along with temporary closures of Beijing’s Forbidden City, Shanghai’s Disneyland and a section of the Great Wall.
Stephen Innes at AxiCorp warned the economic shock to China and the world—just as a growth slowdown appeared to be easing—could be massive.
“The biggest threat to the global economy is not just because the disease spreads quickly across countries through networks related to global travel,” he said in a note.
“But also because any economic shock to China’s colossal industrial and consumption engines will spread rapidly to other countries through the increased trade and financial linkages associated with globalization.”
He added: “Unlike 2003 where SARS was less impactful on the developed world market, the rest of the world could feel the pinch this time around.”
If the new virus has the same impact on China as SARS, the falls could be worse than projected, Innes said, because consumption is a bigger part of the country’s economy and its overall growth trajectory is weaker. With AFP