SYDNEY/TOKYO- Asian stocks bounced with Chinese markets reversing some of their previous plunge amid official efforts to calm virus fears, although sentiment remained fragile with oil near 13-month lows.
The total number of coronavirus deaths in China reached 425 as of the end of Monday, from 20,438 cases.
China’s central bank has flooded the economy with cash while trimming some key lending rates, but analysts suspect more will have to be done to offset the economic fallout from the virus.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.0 percent, led by gains in South Korea and Australia. Japan’s Nikkei inched up 0.1 percent.
“Given the extent of the shutdowns in China as well as the rapid rise in the virus that is likely to continue through March or April, a significant hit to China and regional growth is very likely,” said JPMorgan economist Joseph Lupton.
“We would assume that in addition to bridging any funding stresses, fiscal policies will need to be ramped up to support growth once the contagion gets under control.”
The Shanghai Composite stood flat in choppy early trading, while the blue-chip CSI300 rebounded 0.9 percent, one day after an almost 8 percent slide on Monday as markets resumed from the Lunar New Year holiday. Hong Kong’s Hang Seng advanced 0.7 percent.
“Chinese authorities have been providing a lot of support for the financial markets. There’s a level of assurance that the rout would not be allowed to go on much further than necessary,” Christy Tan, head of markets strategy for Asia at National Australia Bank in Singapore.
“This could prove to be temporary if we see worse news or little sign of reaching containment of the (coronavirus) situation,” she added.
In an effort to stop the rout, China’s state-backed Securities Times published an op-ed on Tuesday to call on investors not to panic.
That followed moves by China’s securities regulator on Monday to limit short selling and stop mutual fund managers selling shares unless they face investor redemptions, according to Reuters.
E-Mini futures for the S&P 500 gained 0.3 percent, extending a 0.7 percent bounce overnight, even after disappointing earnings results from Alphabet Inc. — Reuters
