Back in 2003, the Severe Acute Respiratory Syndrome, or the SARS crisis as it was commonly known, had led to over 700 fatalities in over 30 countries. Every Asia Pacific (APAC) market other than India, Indonesia, and Japan saw a significant decline in GDP growth in the second quarter of 2003 (Q2FY03) at the height of the SARS outbreak. The Chinese economy slowed to 9.1 per cent in this quarter, from 11.1 per cent in Q1FY03. In Hong Kong and Singapore, growth dipped 4.5 percentage points (ppt), while Taiwan’s growth plummeted 6.4 ppt, suggests a Credit Suisse report. However, most markets fully normalised in the second half of 2003.
Asian economies entered the coronavirus
crisis with much less momentum than during SARS, and will likely face a bigger short-term setback. “Epidemiologically, SARS was essentially a one-quarter event, but Wuhan’s spread might last longer, especially if the virus mutates, and if asymptomatic transmission is possible. With the exception of a few markets, we doubt that monetary or fiscal policy can provide much help,” wrote Dan Fineman, co-head of equity strategy for Asia Pacific at Credit Suisse in a co-authored report with Siriporn Sothikul.
Given the recent developments, they rate Hong Kong, Singapore, Thailand and China
as most vulnerable. “The virus should not greatly affect global IT demand and could help internet names with e-commerce businesses,” the Credit Suisse note says. According to Jefferies, Hong Kong-listed stocks that corrected the most during the SARS crisis in 2003 included hotels, airlines, telecom and developers. On the other hand, the most resilient ones were insurance, utilities and railroad. The most resilient sectors included pharma, telecom, health care, real estate investment trusts, and utilities.