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Asia report: Seoul leads markets lower as coronavirus spreads

By Josh White

Date: Monday 24 Feb 2020

Asia report: Seoul leads markets lower as coronavirus spreads

(Sharecast News) - Most markets in Asia closed on the red on Monday, with South Korean stocks plunging as the country grappled with a rapidly spreading outbreak of the Covid-19 coronavirus.
In Japan, markets were closed for a public holiday, as the safe-haven yen strengthened 0.32% against the dollar to last trade at JPY 111.25.

On the mainland, the Shanghai Composite was 0.28% weaker at 3,031.23, and the smaller, technology-heavy Shenzhen Composite managed gains of 1.36% to 1,933.36.

South Korea's Kospi plunged 3.87% to 2,079.04, while the Hang Seng Index in Hong Kong was 1.79% weaker at 26,820.88.

Both of the blue-chip technology stocks were weaker in Seoul, with Samsung Electronics down 4.05% and SK Hynix off 3.4%.

Airlines were well below the waterline on the Korean peninsula, with Asiana Airlines down 6.09% and Korean Air Lines off 6.16%.

Both carriers confirmed they would be suspending flights to and from the country's fourth largest city, Daegu, which has the largest number of coronavirus cases in South Korea.

Authorities in Seoul raised its alert around the coronavirus outbreak to the highest level on Monday, as the number of confirmed cases saw a stark spike over the weekend.

Early in the day, the Korea Centers for Disease Control and Prevention confirmed that seven people had died from the virus in the country thus far, while the total number of cases was up 161 to 763, making for the highest number of cases outside China.

Airlines were also among the big losers on the Hong Kong bourse amid the outbreak, with China Eastern Airlines down 2.73% and China Southern Airlines off 3.74%.

"We've gone from deceleration in China to acceleration elsewhere," said Oanda analyst Craig Erlam.

"It seems investors may have been a little premature in declaring victory which is the risk of the FOMO dip buying trend that we've become all-too familiar with.

"With the number of cases now picking up outside of China and companies providing intermittent updates about the impact on business, we may see a more dramatic re-evaluation of the economic consequences of the virus."

Erlam noted that the IMF had warned of a modest hit to growth in front of the G20 over the weekend, but he said that could become more dire as the number of infections outside of China accelerated.

"Interestingly, they referenced the support of monetary policy and easing trade tensions to the economy.

"No major change to fiscal attitudes then, it would appear."

Oil prices fell through the floor at the end of the Asian day, with Brent crude last down 4.1% at $56.22 per barrel, and West Texas Intermediate off 4.01% at $51.32.

In Australia, the S&P/ASX 200 was down 2.25% at 6,978.30, with flag carrier Qantas tumbling 7.53%.

Across the Tasman Sea, New Zealand's S&P/NZX 50 lost 1.79% to settle at 11,857.12, with travel and tourism stocks the hardest hit as the country's government extended a ban on travellers from China for another eight days.

Majority state-owned airline Air New Zealand saw its listed shares fall 5.49%, while airport operator AIAL was down 3.8% and Tourism Holdings lost 4.2%.

Both of the down under dollars were weaker on the greenback, with the Aussie last off 0.42% at AUD 1.5156 and the Kiwi retreating 0.46% to NZD 1.5825.

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