NEW YORK – Asian stock markets slumped Tuesday as a Severe Acute Respiratory Syndrome (SARS)-like virus taking hold in China spooked investors, while sentiment suffered a knock also from a credit-ratings downgrade to major financial hub Hong Kong.
Most European and United States (US) markets followed Asia lower after Hong Kong slumped 2.8 percent by the close and Shanghai ended with a loss of 1.4 percent.
Moody’s has lowered its credit rating on Hong Kong, which has likely fallen into recession owing to the unrest as well as the China-US trade war.
AJ Bell investment director Russ Mould attributed the weakness in stock markets in Asia and beyond to “reports the deadly virus has spread to neighboring countries, with all the potential economic disruption that could cause.”
Analysts also cited a muted forecast from the International Monetary Fund, which cut the global growth estimate for 2020 to 3.3 percent, 0.1 percentage point lower than in the prior report released in October, noting an improvement in the US-China trade picture but pointing to weakness in India.
The new coronavirus strain has caused alarm because of its connection to SARS, which killed nearly 650 people across mainland China and Hong Kong in 2002-2003.
“The cost to the global economy can be quite staggering in negative GDP terms if this outbreak reaches epidemic proportions,” said AxiCorp analyst Stephen Innes in a note. (AFP)
