HONG KONG: Asian shares tumbled on Tuesday amid worries about a second wave of coronavirus infections after the Chinese city where the pandemic originated reported its first new cases since its lockdown was lifted.
As some of the worst-hit countries including Spain, Italy and France take heart from slowing death and infection rates, they are gradually allowing businesses to open up and try to get back to some semblance of normality.
However, after weeks of no new cases, Wuhan, the central Chinese city where the outbreak first emerged, reported six new infections in two days and South Korea announced its biggest spike in new cases for more than a month. The news jolted confidence on trading floors and weighed on regional markets Tuesday.
Tokyo went into the break 0.2% lower, Hong Kong, Sydney, Singapore, Seoul and Taipei fell more than one percent, while Shanghai eased 0.1%.
Manila and Jakarta also fell, though Wellington edged up slightly.
“Indications abound that increased mobility will lead to re-occurrences of the virus, which will change the slope of the recovery,” said AxiCorp’s Stephen Innes, noting that news reports had generally emphasised the negative elements of reopening.
“While markets may eventually desensitise to mini-cluster outbreaks, provided death statistics remain static… at this stage, it does not lessen fears of a significant secondary spreader, which will undoubtedly weigh on consumer sentiment and hurt the rebound.”
He added that investors would have to expect such uncertainty until a vaccine is available.
The losses come after a healthy rally across equity markets from troughs reached in March as the disease began to take hold around the world and forced nations to lock down, effectively closing the global economy and pushing it into an expected recession.
And, while there are forecasts that growth will bounce back, there is discussion over how quickly that will happen.