Donnerstag, 04.06.2020 17:08 Uhr

Taiwan and New Zealand less impacted by COVID19

Verantwortlicher Autor: Carlo Marino Rome, 04.04.2020, 10:40 Uhr
Nachricht/Bericht: +++ Wirtschaft und Finanzen +++ Bericht 4654x gelesen

Rome [ENA] The sudden emergence of global “black swans”, started from the China-US trade war and the coronavirus pandemic, increased instability in international politics. Deep is the impact of this exceptional situation on oil prices, and risks are deepening in case the extraordinary OPEC+ meeting on April 6th will be unsuccessful in ending the current price war between Saudi Arabia and Russia.

Stagnant oil prices and its political effects may reveal deeper than the economic ones. Among Asian markets, Taiwan and New Zealand seem to be less negatively touched by the coronavirus directly due to sound and proactive policies and low exposure to oil in benchmark indices. The sectoral composition of the indices is a crucial factor in this case. Even though the recent turbulence had a bad effect on performance, information technology has proven to be relatively stable in this round of market massacre and constitutes 51% of market capitalization in Taiwan.

New Zealand’s index has various resilient sectors, such as communication services, health care and utilities — and, to a lesser extent, consumer staples. The reduced exposure to financials also indicates that New Zealand is less vulnerable to ultra-low rates. On the other side, Asian equities are in red. Hammered by one fear after another, most markets have either entered the bear market or are getting close to the line. A widely spreading coronavirus pandemic, an unresolved oil dilemma and lower interest rates are escalating fears for a recession and even for a depression.

While the rest of Asia is in "bear market" differences exist among mainland China, New Zealand, Hong Kong and Taiwan . The trilemma in coronavirus, oil and interest rates affects above all energy, financials, consumer discretionary, industrial and materials. Instead, consumer staple, real estate and information technology should be less affected, given the inelasticity on essential sales and the medium-term market outlook on 5G-related demand. Health care, utilities and communication services are more resilient. Demand on consumer discretionary has shrunk not only in luxury goods and hospitality but also in the automobile industry, both in demand and supply.

With restrictions in passenger movement and lower demand in capital goods, various industries are impacted, ranging from aviation to machineries. For the specific case of Peoples Republic of China, the high return has attracted capital, but risks remain on liquidity. Information technology do not seem to be altered by the market perception on the medium-term outlook on 5G-related manufacturers and service providers, such as semiconductor, cloud services etc.

Amid the negative shocks, health care, utilities and communication services will be more resilient. Against the background of an escalating coronavirus outbreak, health care is a clear shelter from the turmoil. Although disruption may still exist for communication services, the basic demand should remain solid.Equities in mainland China seem to be rather insulated from the world and the positive official news on the control of coronavirus have spread reason for market resilience.While health care and information technology have supported Shenzhen, an explanation for Shanghai’s performance is unclear. However, foreign investors have accelerated the sell-off.

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