Asian stock markets were largely unfazed early Wednesday by the rising global concerns over an outbreak of a coronavirus that can cause deadly pneumonia, despite investor worry over the impact the health emergency may have on travel and tourism ahead of the Lunar New Year that starts Saturday.
Stocks in China were mixed early Wednesday. The Shanghai Composite SHCOMP, -0.16% was down about 0.25%, with the Shenzhen 399106, +0.19% flat. Hong Kong HSI, +0.88% stocks, which took a hit Tuesday, were rebounding by about 0.8% on Wednesday.
UBS believes China learned lessons from the SARS outbreak in 2002. The mortality rate of the Wuhan pneumonia seems notably lower than SARS. However, the ongoing travel peak season — the lunar new year starts Saturday — is a tremendous challenge, which could complicate the disease diffusion.
If the pneumonia couldn’t be contained in the short term, expect China’s retail sales, tourism, hotel and catering, travel activities likely to be hit, especially in 1Q and early 2Q. UBS’ forecast of sequential growth rebound in the first half of 2020 would face some downside risk.
“There is a legitimate threat to travel,” Henry Harteveldt, a travel industry analyst in San Francisco, told the Associated Press. “It’s small now, but with the potential to become much larger with just some innocuous event such as an undetected passenger getting through (health) screening at an arrival airport like San Francisco International, Kennedy or LAX.”
Harteveldt said the situation also could become worse for airlines if companies start to restrict travel to China.
Royal Caribbean said in a statement, “In China, guests and crew are receiving enhanced health screening before boarding. The health and safety of our guests and crew is our top priority. We are monitoring the situation closely together with health authorities, and our ships are prepared to take additional preventive measures as circumstances indicate.”
Japanese stocks were rising early Wednesday in the face of concerns about tourist demand during the Lunar New Year holidays due to the spread of coronavirus. The Nikkei NIK, +0.56% was up 0.6%.
Other stock markets in Asia were also slightly higher early Wednesday.
The story was compiled from Dow Jones Newswires and Associated Press reports.