Bangkok The intervention of the central banks and the hope for new economic stimulus programs are having an effect: on the stock exchanges in the Asia-Pacific region there is a cautious recovery at the end of the week.
Almost all equity markets from Australia to Korea to China and Southeast Asia were trading at the start of trading. Only Japan did not participate in the price increases: there the stock exchanges were closed due to a holiday.
The Kospi index in South Korea temporarily rose by more than four percent. The index had previously dropped to its lowest level since 2009. The government in Seoul announced on Thursday a $ 39 billion program to secure small business funding in the face of the coronavirus crisis.
The stock exchanges in Taiwan and Hong Kong also recovered, with a significant gain of more than four percent at times. The Chinese leading index CSI 300, which reflects the price development on the stock exchanges in Shanghai and Shenzhen, rose by more than one percent in the morning.
In Australia, the leading index S & P / ASX 200 was temporarily more than four percent higher in the morning than in the previous day. Prime Minister Scott Morrison’s government is currently preparing a second stimulus package to mitigate the economic impact of the virus pandemic. Finance Minister Josh Frydenberg said in a television interview on Friday that it is said to be “significantly larger” than the $ 10 billion program that Australia presented last week.
Australia stops entry for foreigners
Australia’s entry ban for foreigners will enter into force on Friday. In addition, the government now prohibits the gathering of more than 100 people in closed rooms. There are currently around 680 confirmed Covid-19 diseases in the country.
The Australian central bank RBA started buying bonds on Friday as part of a quantitative easing program that central bankers want to use to tackle turbulence in the financial markets. On Thursday, the RBA also lowered its key interest rate by a quarter percentage point to a record low of 0.25 percent.
From the economists’ perspective, Australia is facing not only the first recession in three decades – but also the worst economic downturn since the Great Depression in the 1920s.
Investment bank analysts Goldman Sachs forecast a six percent decline in economic output this year on Friday, mainly due to the slump in private consumption. They expect spending on hotel and restaurant visits to halve this year.
Several central banks react with countermeasures
The countries of Southeast Asia are also preparing for a serious economic downturn. Several central banks in the region reacted to this on Thursday with countermeasures: The central banks of the Philippines and Indonesia cut their key interest rates by 50 and 25 basis points, respectively. In Malaysia, the central bank cut the reserve ratio rate to provide additional liquidity in the financial system.
Both in Malaysia and in the Philippines, the stock markets were up around two percent at the start of trading. Malaysia has the most confirmed coronavirus infections in the region with around 900 cases.
In order to curb the spread, the country closed its borders and significantly restricted freedom of movement. Emergency rules already apply in the Philippines. On Thursday, the government announced a complete entry ban for foreigners.
Extensive entry restrictions for foreigners also came into force in Indonesia on Friday. Southeast Asia’s largest economy is at risk of being hit hardest by the corona virus health crisis.
The country has reported 25 deaths as a result of Covid 19 disease – more than any other country in the region. The number of officially confirmed infections is comparatively low at around 300, which raises doubts among observers as to whether enough is being tested.
Investor confidence in the country’s crisis management also appears to be low: the Jakarta stock exchange was an exception on Friday morning and was down – at times by more than three percent.
More: Read the current developments on the corona virus in the live blog.