South Korea proposes new budget to counter virus impact
Song Jung-a reports from Seoul
South Korea’s finance ministry on Wednesday proposed an extra budget of nearly Won12tn, in a move to boost an economy weakened by the rapid spread of COVID-19.
The supplementary budget of Won11.7tn ($9.8bn), which the government plans to submit for approval on Thursday, would be the country’s biggest spending effort to tackle a contagious disease.
“This is a measure to support efforts to overcome economic damage and revitalise economic momentum, which is important,” finance minister Hong Nam-ki said. “We’ve prepared most measures to shore up frozen consumption.”
The proposal came as the country continued to report a spike in new cases of coronoavirus. The country had 516 new cases on Wednesday with the total number of infections rising to 5,328 and total deaths at 32, according to the Korea Centers for Disease Control and Prevention.
President Moon Jae-in has declared a “war” on the virus in the country hit hardest by the outbreak outside of China. On Tuesday, he apologised for shortages of face masks and promised financial support for virus-struck small and mid-sized businesses.
Asia markets muted after Fed rate cut
Hudson Lockett reports from Hong Kong
Asian markets struggled for direction in the wake of an emergency rate reduction by the Federal Reserve, as investors across the region hardest hit by the coronavirus outbreak grappled with how to react to the surprise move by the US central bank.
The mixed reaction from Asia-Pacific stocks came after the 10-year US Treasury yield dropped to a record low and stocks on Wall Street fell sharply in response to comments from Fed chairman Jay Powell in which he appeared reluctant to lower rates still further.
“We like our current policy stance . . . but we are prepared to use our tools appropriately,” Mr Powell said at a press conference on Tuesday. Futures markets pointed to a gain of 0.7 per cent for the S&P 500, while the 10-year US Treasury yield was down 4 basis points at 0.962 after falling below 1 per cent for the first time on Tuesday.
But stock markets moves in Asia were muted, with China’s CSI 300 index of major Shanghai and Shenzhen-listed stocks off just 0.2 per cent as Tokyo’s Topix edged down 0.1 per cent and Hong Kong’s Hang Seng shed 0.5 per cent.
China reports 38 new deaths from coronavirus
China’s health authorities this morning reported 38 new deaths from the coronavirus to the end of Tuesday.
All but one of the new cases were in Hubei, the centre of the outbreak, with the other coming in Inner Mongolia. The total number of mortalities from the virus has now reached 2,981.
Across the country, there were 119 new cases on Tuesday, and 2,652 cases were cured, Chinese health authorities said. Total cases now stand at 80,270.
Hong Kong PMI hits record low after virus weighs on business activity
Hong Kong PMI hit a record low in February and business conditions in the city dropped at the sharpest rate in over two decades, in one of the clearest signs yet of the economic fallout from the coronavirus.
The IHS Markit Hong Kong Purchasing Manager’s Index, a broad gauge of private sector activity, in February fell at the steepest rate since the survey began in 1998, and dropped below levels recorded in 2008 during the global financial crisis. Output and new orders also weakened at their fastest levels on record.
IHS Markit pointed to the effects of the virus on business activity, which it said “dropped sharply midway through the first quarter as the Covid-19 situation reportedly led to fewer working days and falling sales”.
It added that output dropped at an “unprecedented rate”, but that some companies reported increased activity and commented on higher demand for essential items, as well as cleaning and disinfecting products.
“Business confidence plummeted in the city, with a majority of firms anticipating lower future output amid expectations that the coronavirus situation will persist in coming months,” said Bernard Aw, principal economist at IHS Markit. He added that companies had responded by cutting employment and making sharp reductions in purchasing activity.