BEIJING: Coronavirus severely hit global stock markets on Friday, the worst week since the 2008 financial crisis. International oil prices also tanked significantly this past week amid fears that the coronavirus could devastate the world economy. The fears were compounded by airlines grounding their planes and suspending flights to coronavirus-hit countries, international media reported.
This week, oil prices fell for five consecutive days, registering a 5.63% downfall, having earlier dipped from $60 to $50 and lower.
The rapid spread of the coronavirus increased fears of a pandemic, with six countries reporting their first cases on Friday and the World Health Organisation (WHO) raising its global spread and impact risk alert to “very high”.
World shares fell again, winding up their worst week since the 2008 global financial crisis and bringing the global wipeout to $6 trillion. Hopes that the epidemic that started in China late last year would be over in months, and that economic activity would quickly return to normal, have been shattered. WHO chief Tedros Adhanom Ghebreyesus said his organisation was not underestimating the risk. WHO spokesman Christian Lindmeier said the scenario of the coronavirus reaching multiple or all countries “is something we have been looking at and warning against since quite a while.”
In Europe, London’s FTSE 100 sank 2.9% to 6,599 and Frankfurt’s DAX tumbled 3.3% to 11,955. France’s CAC 40 lost 2.7% to 5,346. The Stoxx Europe 600 index is heading for its sharpest weekly drop since October 2008.
Markets in China and Hong Kong had been doing relatively well despite virus fears. Mainland markets were flooded with credit by authorities to shore up prices after trading resumed following an extended Lunar New Year holiday. Chinese investor sentiment also has been buoyed by promises of lower interest rates, tax breaks and other aid to help revive manufacturing and other industries.
But now, major companies are issuing profit warnings, saying factory shutdowns in China are disrupting supply chains. They say travel bans and other anti-disease measures are hurting sales in China, an increasingly vital consumer market.
In Asian trading on Friday, the Nikkei 225 in Tokyo tumbled 3.7% to 21,142.96 and the Shanghai Composite Index also fell 3.7%, to 2,880.30. Hong Kong’s Hang Seng lost 2.5% to 26,129.93.
The Kospi in Seoul fell 3.3% to 1,987.01 and Sydney’s S&P-ASX 200 sank 3.2% to 6,441.2. India’s Sensex skidded 3.6% to 38,331.87. New Zealand and Southeast Asian markets also retreated.
Pakistan's benchmark stock index — heavily weighted by oil stocks, such as Pakistan Petroleum Limited (PPL), Oil and Gas Development Company Limited (OGDCL), and Pakistan Oilfields Limited (POL) — also felt the impact of this week's negative pressure in oil prices.
Hammad Aman, the head of sales at KASB Securities, told Geo News that panic in the local stock market was observed at the start of the week and it grew when news of the first coronavirus case broke on Wednesday. By evening the same day, investors had started pulling out from mutual funds and markets opened in the red on subsequent days.
A research analyst at a Karachi-based investment company echoed the sentiment. "The general fear in equity markets is that prolonged curfews and supply-chain disturbances can cause a decline in aggregate demand," said the analyst, who declined to be identified as they were not permitted to speak to the media.
"This generally leads investors to switch from riskier assets — that is, equities — to safer ones, such as treasuries and gold. We have been seeing that trend recently in Pakistan," they added.
"Moreover, being an oil-importing nation, Pakistan is technically not paying for the imported oil at the moment. It has $3 billion from Saudi Arabia (as foreign currency support), which is why there has been no outflow.
"However, the cheaper the oil is in international markets, the more barrels Pakistan can import from the fund," the KASB official noted.
On the other hand, petrol is currently being sold in Rs117 in Pakistan but, according to Aman, there are talks of slashing per-litre prices by Rs20-25.
Realistically speaking, however, a reduction of Rs8-10 a litre could be expected in March 2020, he said, adding that it would bring down inflation from 14.6 percent in January to a forecast of 13-13.25 percent — the same as mentioned by Planning and Development Minister Asad Umar earlier this month.
Meanwhile, over 300 pilgrims, among them women, have reached Taftan after being permitted to enter from the Pakistan-Iran border, the spokesman for the Balochistan government said.
Liaquat Shahwani said that all those who are arriving in Pakistan from Iran will be quarantined for 10 days, saying that they will be allowed to leave only after the fulfilment of the term.
The Pakistani pilgrims were forced to leave the Iranian territory due to which they were stranded in the area between the Pakistan-Iran border, confirmed the spokesman. Shahwani said that all pilgrims coming from Iran to Pakistan will be screened for the coronavirus.
On Wednesday night, Pakistan confirmed its first two coronavirus cases and the victims who were diagnosed with the virus had a travel history to the country.
Earlier in the day, Special Assistant to Prime Minister on Health Dr Zafar Mirza said the government now has a plan to deal with the situation of pilgrims coming to Pakistan from Iran. Dr Mirza said he has reviewed the situation at the Taftan-Zahedan border. During his visit, the health adviser said that the over next few days the authorities will gradually allow Pakistani zaireen returning from Iran to enter the country, after full health screening.
Infections continued to spread rapidly around the world, as countries started stockpiling medical equipment and investors took flight in expectation of a global recession.
In Europe, the number of people who tested positive for the illness in Italy increased by more than 200 to 650. Germany, which warned of an impending epidemic, has almost 60 confirmed cases, France around 18 and Spain 15.
United Kingdom’s number of infections rose to 19 on Friday and Netherlands confirmed its second case. Iran announced on Friday the closure of all schools for three days from Saturday as its death toll rose to 34 with 388 people infected.
South Korea reported its largest daily increase yet as the total number of infections rose by 571 to 2,337 on Friday. The death toll stood at 13, unchanged from a day earlier. Mainland China - where the virus originated late last year - reported 327 new cases on Friday, the lowest since Jan. 23.
The United States asked its military in Saudi Arabia to avoid crowded venues including malls and cinemas, according to a document from the US embassy. Cyprus will shut four checkpoints linking the two sides of the ethnically-split island for seven days as a precaution against the spread of the virus.
Russia on Friday temporarily barred Iranians from entering the country and said it would also restrict the entry of South Koreans from March 1 as a precaution. Vietnam plans to suspend visa-free travel for South Koreans starting on Saturday.
Switzerland joined countries banning big events, forcing cancellations of next week’s Geneva international car show and all of the weekend’s football matches in the Swiss league.
Tokyo Disneyland and Osaka-based theme park Universal Studios Japan will be closed from Saturday to March 15, while Tokyo Olympics organisers will make a call next week on how they plan to hold the ceremonial torch relay.
The coronavirus outbreak is “getting bigger”, the World Health Organization said on Friday after Nigeria confirmed sub-Saharan Africa’s first case, reiterating its warning that the virus could reach most “if not all countries”. The Italian man who was confirmed as Nigeria’s first case was in the country for almost two full days before being isolated, travelled through Lagos and visited another state.
Lithuania, Belarus, Azerbaijan and New Zealand reported their first cases on Friday. Romania confirmed two more cases following its first on Wednesday and Israel reported its second infection. Guests at two Abu Dhabi hotels who interacted with two Italian professional cyclists with coronavirus have been placed under quarantine in the hotels. Three small groups of guests left a Tenerife hotel on Friday on its fourth day of quarantine and at least two people could be seen leaving in an ambulance, but around 700 holidaymakers remained in the compound.
Japan’s confirmed cases topped 200 on Friday, including four deaths. Working parents, local authorities, companies were stunned by Prime Minister Shinzo Abe’s call to close schools and Hokkaido prefecture declared state of emergency.
The virus has caused nearly 80,000 infections and almost 2,800 deaths, according official Chinese figures. Besides China, it has spread to 55 countries, where about 3,700 cases and 57 deaths have been reported, according to the WHO.
Recovered patients who were discharged from hospitalisation but later tested positive again have been found not to be infectious, an official at China’s National Health Commission said on Friday.