Asian markets experienced a drop at the start of the week due to apprehensions regarding a virus outbreak in China. However, the situation took a turn for the better on Wednesday as the Chinese government’s response to the virus helped restore confidence and alleviate fears of a potential global pandemic.
During the course of Wednesday, stocks in Asian markets showed signs of recovery, with the exception of Shanghai where concerns about the impact on local demand and tourism continued to cause unease among investors. The worries stem from a novel virus originating in Wuhan, China, which coincides with the upcoming Lunar New Year celebrations. This period usually witnesses a significant influx of Chinese travelers for festivities and family reunions. The initial concerns surrounding the virus have caused a decline in Asian stocks from their recent highs following the optimistic outlook brought about by the trade truce.
The Shanghai Composite index bounced back from a previous 1.4% decline and is now trading 0.01% higher. Assets considered safe havens such as the Japanese Yen, gold, and bonds saw an increase during the period of uncertainty but have since retraced the gains made on Tuesday. The MSCI index, which encompasses Asia-Pacific stocks excluding Japan, recorded a 0.71% upsurge on Wednesday, indicating progress in recovering from the losses incurred on Tuesday. Major indexes like Japan’s Nikkei, Hong Kong’s Hang Seng, and South Korea’s Kospi also showed positive movements of more than 0.5% on Wednesday.
The virus responsible for the outbreak in China has been identified as 2019-nCoV or coronavirus. Experts are still assessing the potential threat posed by the virus, which exhibits similarities to the SARS and MERS viruses. Initially surfacing in Wuhan, China, the virus has spread to 13 other Chinese provinces in addition to cases reported in the US, Taiwan, Japan, South Korea, and Thailand.
