Finance Finance News Australian markets showing symptoms of coronavirus

Australian markets showing symptoms of coronavirus

The Wuhan coronavirus has spooked investors and dragged global markets down.
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The deadly coronavirus has infected global stockmarkets as fears mount that the disease’s spread will become pandemic.

Chinese shares fell more than 3 per cent over the past week as authorities placed close to 20 million people into lockdown in the cities of Wuhan and Huanggang, in the Hubei province.

Japanese, European, and US markets also suffered small losses as more cases of the disease were confirmed outside of China.

Australia’s benchmark ASX200 index managed to narrowly buck its global peers’ downward trend and closed out the week with a gain of 0.37 per cent.

But some industries – especially those connected to tourism and travel – suffered through a shaky week, according to CommSec.

“Uncertainty remains around the severity of the coronavirus,” CommSec market analyst Steven Daghlian said.

“While the [World Health Organisation] said it isn’t considering the virus as an international public emergency just yet, airline stocks, travel agents and airports were volatile this week”

Moody’s Investors Service, a US-based firm that advises professional investors, cautioned Australian airports face “significant but short-term” difficulties from possible travel restrictions.

“While the WHO has to date not recommended any travel restrictions, if the effect on regional travel is similar to that during the SARS outbreak in 2003, passenger volumes between Asian destinations – particularly China – and Australia could be significantly affected,” senior vice president Arnon Musiker said.

SARS (Severe Acute Respiratory Syndrome) was also caused by a type of coronavirus, and had similar effects on its victims.

At the beginning of the SARS panic, Mr Musiker said the number of short-term visitors arriving in Australia fell notably and stayed low for six months.

A similar decline in the number of passengers flying to Australia in response to the new coronavirus would simply add more misery to beleaguered airlines already fighting against poor consumer confidence and the fallout from the bushfires.

Investors told not to panic – yet

AMP Capital senior economist Diana Mousina said the coronavirus’ rapid spread is concerning, but the Chinese government’s quick response means it’s unlikely to reach the scale of the SARS epidemic.

And while it’s impossible to say how much further the disease can spread, most epidemics in recent times have only lasted between six and 18 months.

“The 2003 impact of the SARS outbreak was shorter due to rapid action by authorities,” Ms Mousina said.

The quick reaction by Chinese authorities this time round is reason for optimism.’’

But the outbreak coincides with the lunar new year – traditionally a busy time for Asian economies as consumers travel, eat out, and spend their money amid the celebrations.

That timing means the coronavirus could potentially cause massive economic disruptions in China and neighbouring economies as worried citizens choose to stay home to protect their health rather than to go out and spend.

“Investors should be alarmed but not panic just yet,” Ms Mousina said.

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