Asian stocks roiled after Covid-19 fears hit fever pitch, STI down 3.7%

THE sharp selloffs in Asian equities resumed on Thursday, after the World Health Organization labelled Covid-19 a pandemic and the US temporarily halted travel from Europe for 30 days.

This follows another dismal session during Wednesday trading on Wall Street, where cases of the coronavirus in the US have exceed 1,000. With fears mounting that the worse has yet to come, the Dow Jones Industrial Average slumped 5.9 per cent, the S&P 500 skidded 4.9 per cent, and the Nasdaq Composite Index shed 4.7 per cent.

The sharp selloffs during the week have sent the Dow into a bear market, with the index down more than 20 per cent from a recent high.

Going into the Thursday session, OCBC Investment Research analysts were expecting a "trying day for Asian markets after a renewed selloff in US equities, with Treasury yields rising in a volatile session".

Singapore's Straits Times Index (STI) fell 104.05 points or 3.7 per cent to 2,679.67 as at 10.38am. The STI, which is trading at levels last seen during the oil crisis in 2016, is trading 16.7 per cent lower on the year.

In North Asia, Japan's Nikkei 225 index dived 1,003.85 points or 5.1 per cent to 18,412.21 and South Korea's Kospi index sank 83.44 points or 4.3 per cent to 1,824.83.

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Meanwhile, losses in Greater China markets were not as steep but still sizeable. Hong Kong's Hang Seng Index fell 935.17 points or 3.7 per cent to 24,297.62, and mainland China's Shanghai Composite Index lost 58.81 points or 2 per cent to 2,909.70.

Among South-east Asian markets, Indonesia's Jakarta Composite Index dropped 214.26 points or 4.1 per cent to 4,939.85, and Malaysia's Kuala Lumpur Composite Index was trading 14.36 points or 1 per cent lower at 1,429.47.

Elsewhere in the Asia-Pacific, Australia's commodity heavy S&P/ASX 200 index erased 340.70 points or 6 per cent to trade at 5,385.20.

AxiCorp global chief markets strategist Stephen Innes said: "The market is faced with two highly uncertain bearish shocks in the form of an unholy Covid-19 economic catastrophe in Italy, and most of Europe, compounded by a dizzying oil price downdraft with the apparent outcome a sharp price selloff across all assets."

That said, he pointed out that the market "may not be yet pricing in a worst-case scenario from this double whammy risk beat down".

Sentiment could hit the travel and leisure sectors further after US President Donald Trump's temporary ban of visitors from Europe, IG market strategist Pan Jingyi noted.

She said:"With approximately a fifth of the visitor arrivals to the US being accounted for by both Western and Eastern Europe region, this would further strain the related sectors."