Virus fears push stocks to 2-week low

Shares tumbled in Asian markets as China announced sharp increases in the number of people affected in an outbreak of a potentially deadly virus. (AFP)
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Updated 28 January 2020

Virus fears push stocks to 2-week low

  • China has confirmed more than 2,700 cases of the new virus, with 81 deaths. Most have been in the central city of Wuhan

LONDON: World shares slipped to their lowest in two weeks on Monday as worries grew about the economic impact of China’s spreading coronavirus, with demand spiking for safe haven assets such as Japanese yen and Treasury notes.

The death toll from the coronavirus outbreak in China rose to 106 and the virus spread to more than 10 countries, including France, Japan and the US. Some health experts questioned whether China can contain the epidemic.

By midday in London, MSCI’s All-Country World Index, which tracks shares across 47 countries, was down 0.6 percent to its lowest since Jan. 9.

In Europe, stock markets slumped at the start of trading, tracking their counterparts in Asia. The pan-European STOXX 600 index fell 2 percent to its lowest level since Jan. 6, and the Euro Stoxx 50 volatility index jumped to its highest level since December.

“The coronavirus is an economic and financial shock. The extent of that shock still needs to be assessed, but it could provide the spark for an arguably long-overdue adjustment in the capital markets,” Marc Chandler, chief market strategist at Bannockburn Securities, told clients.

In Asia, Japan’s Nikkei average slid 2 percent, the biggest one-day fall in five months. A Tokyo-listed China proxy, ChinaAMC CSI 300 index ETF, fell 2.2 percent. Many markets in Asia were closed for the Lunar New Year holiday.

US S&P 500 mini futures were last down 1.36 percent, suggesting an open in the red on Wall Street later. The VIX volatility index, also known as Wall Street’s “fear gauge,” hit its highest levels since October.

The ability of the coronavirus to spread is getting stronger and infections could continue to rise, China’s National Health Commission said on Sunday. More than 2,800 people globally have been infected.

China announced it will extend the week-long new year holiday by three days to Feb. 2 and schools will return from their break later than usual. Chinese-ruled Hong Kong said it would ban entry to people who have visited Hubei province in the past 14 days.

“While the continued spread of the virus is concerning, we were expecting that the outbreak could worsen before being brought under control,” UBS strategists wrote in a research note, adding that they expected impact on the region’s economy and risk assets to be short-lived.

“Sentiment may remain depressed in the near term, especially for those sectors most impacted, however we retain a positive outlook for emerging market stocks, including a preference for China equities within our Asia portfolios.”

MSCI’s broadest index of Asia-Pacific shares outside Japan was off 0.45 percent, although markets in China, Hong Kong, Taiwan, South Korea, Singapore and Australia were closed on Monday.

All three major Wall Street indexes closed sharply lower on Friday, with the S&P 500 seeing its biggest one-day percentage drop in over three months.

The S&P 500 lost 0.9 percent, the Dow Jones Industrial Average 0.6 percent and the Nasdaq Composite 0.9 percent. The US Centers for Disease Control and Prevention has confirmed five case of the virus on US soil.

US Treasury prices advanced, pushing down yields. The benchmark 10-year note’s yield fell to a three-and-half-month trough of 1.6030 percent. It last traded at 1.6321 percent.

Elsewhere in bonds, the Italian 10-year yield fell to a three-month low Monday after right-wing leader Matteo Salvini failed in his bid to overturn decades of leftist rule in the northern region of Emilia-Romagna on Sunday, bringing some relief to the government.

In the currency market, the Japanese yen strengthened as much as 0.5 percent to 108.73 yen per dollar, a two-and-a-half-week high.

The euro last traded unchanged to the dollar.

China’s yuan tumbled to a 2020 low, and commodity-linked currencies such as the Australian dollar fell, as growing fears about the spread of a coronavirus from China pushed investors into safe assets.

The coronavirus outbreak also pressured oil and other commodity prices.

US West Texas Intermediate crude futures plummeted 2.69 percent to a three-and-a-half-month low of $52.13. Brent shed more than 3 percent to a three-month low of $58.50 per barrel.

Spot gold rose as much as 1.0% to $1,585.80 per ounce, the highest level since Jan. 8, as the coronavirus outbreak pushed up demand for the safe-haven metal.


Saudi Space Commission set for SR2 billion boost

Updated 29 October 2020

Saudi Space Commission set for SR2 billion boost

  • Space business and space economy are expected to grow into the trillions of riyals as we go forward: Prince Sultan bin Salman, Chairman of Saudi Space Commission

RIYADH: The Kingdom is planning an SR8 billion ($2.1 billion) boost for its space program as part of Vision 2030, said Saudi Space Commission (SSC) Chairman Prince Sultan bin Salman.

The commission has finalized a plan for the government, expected to be revealed later this year, under which the sector’s budget would receive an initial boost of SR2 billion.

“In the time where we live now, space is becoming a fundamental sector of the global economy, touching every aspect of our lives on Earth. Space business and space economy are expected to grow into the trillions of riyals as we go forward,” Prince Sultan said.

The commission was set up by a royal decree in late 2018 to stimulate space-related research and industrial activities.

“We believe there are a lot of opportunities that exist in the space sector and we, in Saudi Arabia, intend to tap these opportunities at all levels,” he added. 

Prince Sultan, who chaired the Saudi Commission on Tourism and Heritage for 18 years, said the Kingdom aspired to become a global player in the space industry while advancing prospects for future generations.

The Saudi space sector’s current return on investment is SR1.81 or every one riyal invested. This compares with a return of between SR7 and SR20 for every riyal invested in the sector in advanced economies, according to SSC data.

SSC plans to sign agreements with international agencies in the US, Russia, China, India and the UAE to boost cooperation, said Prince Sultan, who flew aboard the US Space Shuttle Discovery in 1985. He was the first astronaut from an Arab or Muslim country in space.

His duties onboard Discovery as a payload specialist included releasing the Arabsat satellite, which was a breakthrough in connecting the region with the rest of the world.

Saudi Arabia is a main founder and financier of the Arab Satellite Communications Organization (Arabsat), launched in 1976, with a 37 percent stake.