Tokyo After the price hunt of the past few days, the stock exchanges in Asia started the day cautiously. Only in Australia did the prices rise significantly, at times by three percent. In Asia, on the other hand, the Kospi Index in Korea and the Shanghai Composite Index in China fluctuated around the previous day’s level in morning trading. The Hong Kong Hangseng Index and the Straits Times Index moved closer to the previous day’s closing price after losses. Only Japan’s stocks lost significantly.
After the price rally of the past few days, the Nikkei 225 index temporarily dropped by more than four percent and then, at 18803.29 points, was still 3.8 percent below the previous day’s lunch break. Because two negative messages from the previous evening depressed the mood.
On the one hand, Tokyo governor Yuriko Koike asked the citizens of the metropolis of 12 million people to leave the apartment only if necessary because of the coronavirus pandemic, if possible. This news raised concerns that the epidemic could now explode in Japan.
The bad news, however, had a positive impact on some companies that could benefit from prescribed couch potatoes and the growing number of sick people. The beverage manufacturer Itoen, as well as food manufacturers such as Nissin and the instant noodle manufacturer Toyo Suisan, rose by almost four percent, the large bakery Yamazaki even by 5.5 percent. Pharmaceutical companies such as Kobayashi Pharmaceutical and Nippon Shinyaku gained over four percent in value, as did video game maker Capcom.
Soft bench suffers from rating shock
On the other hand, the rating agency Moody’s had lowered Softbank’s credit rating by two steps from Ba1 to Ba3 on Wednesday. Because analysts believe that Softbank’s $ 38 billion share and debt buyback program, unlike Softbank’s promise of credit quality, does more harm than good.
So far, Moody’s’s rivals have kept their credit ratings stable. Nevertheless, Softbank’s share price, which had skyrocketed 57.5 percent in the first three days of the week, dropped 7.9 percent to 3,840 yen by the lunch break. Because investors fear that other credit rating agencies could now also lower Softbanks rating, a fund manager told the business newspaper Nikkei.
Asian investors hope to restart in China
The mood was a little better in Asia. In Korea, analysts identified one reason that the large aid program in the United States had stimulated investors’ risk appetite again. Another is investors’ hope that with the restart of the Chinese economy, Asian supply chains will also resume normal operations.
But observers warn that there could be larger sales again. It could be particularly turbulent in April if companies take stock after the first quarter of the pandemic crisis and take a look ahead. Because the prospects are unknown and generally bleak.
The economists at the credit rating agency Moody’s are now predicting “an unprecedented shock in the first half of the year” for the G20 countries. They therefore lowered the annual forecast for the 20 most important economies in the world to minus 0.5 percent. In November they still expected an increase of 2.6 percent. Moody’s then expects the G20 economies to grow by 3.2 percent again in 2021.
For China, credit assessors are now predicting 3.3 percent growth this year and six percent next year. For Germany, economists are forecasting a 5.4 percent slump in the first two quarters, and a slightly less decline in other European countries and the United States.
But the damage could go on for a long time, Moody’s believes: Support from fiscal and monetary policy is likely to push the economies above trend in the following quarters and in 2021. But it is unlikely that the loss of the second quarter can be made up for, says Moody’s.
More: Read all current developments regarding the corona pandemic here.