Logo of Phnom Penh Post newspaper Phnom Penh Post - Asia equities back in red as virus economic reality bites

Asia equities back in red as virus economic reality bites

Content image - Phnom Penh Post
Markets have been rallying as lockdowns that emptied many global cities begin to be lifted. AFP

Asia equities back in red as virus economic reality bites

Asian markets dropped on Thursday as the economic reality of the coronavirus crisis became even starker, and Sino-US relations soured, overshadowing recent optimism over the easing of lockdown measures.

With countries from Asia-Pacific to Europe and US states reopening their shattered economies, global equities have enjoyed a strong revival after crashing in March, with oil also getting much-needed support from hopes for a pick-up in demand.

But a slew of monumentally bad data has highlighted the struggle governments face is reigniting economies, with hundreds of millions of people left jobless and countless companies going under or on the brink.

On Thursday, the Bank of England said it expects Britain’s economic output to crash 14 per cent this year, while data showed France’s industrial output collapsed 16.2 per cent in March on a monthly basis.

China presented a mixed bag of trade data, with exports showing a surprise jump in exports but imports tumbling. While the rise in overseas shipments was welcome, observers said it was partly boosted by sales of medical equipment and much worse figures were to be expected over the coming months.

That came a day after payrolls firm Automatic Data Processing Inc (ADP) said the US private sector lost 20.2 million jobs last month alone, sending shivers through markets, days ahead of the release of a key government report that is forecast to show a historic fall in employment.

The European Commission forecast the eurozone economy would shrink 7.7 per cent this year, while India reported its crucial service sector – which makes up more than half of its gross domestic product – collapsed last month.

“Sentiment appears to be shifting lower as the scope of shutdowns and travel restrictions are giving rise to economic uncertainty, which is gradually retaking hold, even more so ahead of what’s bound to be a dreary [US jobs] report on Friday,” said AxiCorp’s Stephen Innes.

After losses in Europe as well as the Dow and S&P 500 on Wall Street, Asia turned red.

Hong Kong slipped 0.7 per cent and Shanghai eased 0.2 per cent, while Mumbai dropped 0.9 per cent and Bangkok shed more than one per cent. Sydney eased 0.4 per cent and Seoul was flat. The Cambodia Securities Exchange index climbed 1.94 per cent.

But Tokyo, which was returning after an extended holiday weekend, ended 0.2 per cent higher, while there were also gains in Wellington and Taiwan as well as Manila despite data showing the Philippines economy shrunk in the first quarter for the first time in more than two decades.

In early trade, London, Paris and Frankfurt were on the front foot.

‘Lasting effects’

“We remain concerned about the potential for the pandemic to have lasting effects on growth,” Ron Temple of Lazard Asset Management LLC said.

“Countries and companies are likely to exit the crisis with significantly higher debt, curtailing their ability to invest and innovate.”

Investors are growing increasingly worried about rising tensions between China and the US after President Donald Trump and Secretary of State Mike Pompeo hit out at Beijing’s handling of the pandemic, accusing it of a cover-up.

China has hit back, saying the White House is telling lies for domestic purposes, and the row has fanned worries the economic superpowers will renew their trade war that hammered global markets last year.

The Financial Times, citing officials in Washington, reported that Trump is looking into stepping up sanctions on China with curbs on supply chains and investment flows.

Such moves would endanger a fragile truce between the two sides that was agreed late last year and which brought some stability to the global economy after almost two years of tariff bickering.

Oanda’s Edward Moya said: “Trump expects China to live up to their end of the trade deal and that seems to have no chance of happening because of Covid-19.”

Oil prices sank, extending Wednesday’s losses that ended a five-day rally.

MOST VIEWED

  • NagaWorld casinos set to reopen, schools to follow

    NAGACORP Ltd has requested that it be allowed to reopen its NagaWorld integrated resorts in Phnom Penh after the government recently approved casinos to operate again, provided they follow Covid-19 prevention measures set by the Ministry of Health. Mey Vann, the director-general of the Ministry

  • ASEM supports Kingdom’s proposal to postpone meeting amid Covid

    The 13th Asia-Europe Meeting (ASEM13) scheduled to be held in Cambodia in November has been postponed until mid-2021 due to the Covid-19 pandemic, a Ministry of Foreign Affairs and International Cooperation press statement released on Saturday said. The decision was made during a two-day meeting

  • Coffee maker roasted for producing fake product

    The Ministry of Interior’s Counter Counterfeit Committee will send a suspect to court on Monday after she allegedly roasted coffee mixed with soybeans and other ingredients, creating a product which could pose a high risk to consumers’ health. On the afternoon of July 2, the

  • Cambodia armed with money laundering laws

    Money laundering will now carry a penalty of up to five years in prison while those convicted of financing terrorists will be jailed for up to 20 years, according to new laws promulgated by King Norodom Sihamoni and seen by The Post on Thursday. Comprising nine

  • Where is Cambodia’s exit strategy that can save the economy?

    With the prospect of being slammed by a double whammy, the government is working on an economic recovery plan to deliver it from Covid-19 and the EU’s partial withdrawal of the Everything But Arms scheme in the next two to three years Cambodia is

  • Schools to be reopened in ‘three stages’

    With guidance from Prime Minister Hun Sen, the Ministry of Education, Youth and Sport, is in the process of reopening schools in three stages. But no timeline has been set, ministry spokesperson Ros Soveacha said on Thursday. Soveacha said the first stage will be to

  • Thai border crossings eased

    The Cambodian Embassy in Thailand said in an announcement on Wednesday that Thailand’s government has allowed certain passengers from several countries to enter its borders. The visitors must go back to their country immediately after their duties in Thailand are fulfilled, the embassy said.

  • Gov’t says tourism recovers slightly despite pandemic

    The Ministry of Tourism and the Phnom Penh municipal administration have recognised 33 tourism businesses in the capital which have consistently implemented safety measures for tourists and adhered to the code of conduct issued by the ministry. Recently, the ministry announced that tourism businesses had to

  • Mull ASEAN border opening, PM urges

    Prime Minister Hun Sen has requested that ASEAN launch a scenario for gradually reopening cross-border travel and trade between countries in the region. He said ASEAN has had more success combating Covid-19 compared to other regions. The prime minister’s request was made at the

  • Ministry reports 11 new Covid-19 cases, reiterates vigilance

    Minister of Health Mam Bun Heng has urged people to continue practising virus prevention techniques after 11 people tested positive for Covid-19 within two days after arriving in the Kingdom. Speaking on Sunday, Bun Heng stressed the importance of washing hands, wearing masks or scarves when