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Seoul bears brunt as Asian markets plunge

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A woman talks on her mobile phone in front of an electronic board showing South Korea’s benchmark stock index (Kospi) at the Korea Exchange in Seoul. AFP

Seoul bears brunt as Asian markets plunge

Seuol led a sharp drop across Asian equity markets on Monday as South Korea announced a surge in Covid-19 infections, while oil plunged and safe-haven assets rallied on growing concerns about a possible pandemic.

With the outbreak showing little sign of easing, investors are increasingly concerned it could have a much longer-term impact on the world economy, which was already stuttering, with a number of companies warning about their bottom lines.

Traders had been broadly optimistic that the virus – which has killed more than 2,600 and infected 80,000 – was being contained outside China but a spurt of infections and deaths in other countries including South Korea, Italy and Iran has fanned fears of a wider outbreak.

“While the coronavirus is probably slowing in China, it is speeding up elsewhere,” said Charles Gillams at RJMG Asset Management.

On Monday, South Korea reported 161 more cases, taking its total to 763 and making it the world’s worst-hit country outside China, with seven people now dead.

President Moon Jae-in has raised the virus alert to the highest “red” level, in a bid to strengthen the government response to the spiralling outbreak.

News of the spread hammered the Kospi, which sank almost four per cent, with market heavyweight Samsung diving 4.1 per cent. The won fell 0.9 per cent and is sitting at a six-month low.

Hong Kong shed 1.6 per cent, with Sydney, Bangkok and Manila each dropping more than two per cent.

Taipei, Jakarta, Singapore and Wellington were all off more than one per cent. The Cambodia Securities Exchange ended 1.86 per cent lower.

Mumbai eased 0.8 per cent with eyes on US President Donald Trump’s visit to India.

Shanghai was off 0.3 per cent, with losses tempered by a series of economy-boosting measures including support for businesses and other stimulus measures.

The losses tracked a sell-off on Wall Street, where the S&P 500 and Nasdaq each gave up more than one per cent, while US 30-year Treasury yields hit an all-time high, indicating a rush into the safe havens.

Reports of the spread of the virus “raised concerns that we could be starting to see the beginnings of a global pandemic, with authorities seemingly at a loss to explain how or why the virus is spreading, particularly in Europe”, said Michael Hewson at CMC Markets UK.

Chinese President Xi Jinping said the epidemic was the “largest public health emergency” since the founding of the People’s Republic in 1949 and admitted that authorities must learn from “obvious shortcomings exposed” during its response.

Beijing later in the day decided to postpone its annual parliament session for the first time since the Cultural Revolution owing to the epidemic.

Meanwhile, Italy has introduced severe containment measures previously seen only in China, with more than 50,000 people in about a dozen northern Italian towns told to stay home.

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