S&P projects coronavirus crisis to stabilise in April

Officers in protective gear escort a person (under the blue sheet) who was on board cruise ship Diamond Princess and was tested positive for coronavirus, after the person is transferred to a maritime police base in Yokohama, south of Tokyo in this photo taken by Kyodo February 4, 2020. Mandatory credit Kyodo/via REUTERS

KUALA LUMPUR: S&P Global Ratings' base-case projection is that the coronavirus crisis will stabilise globally in April 2020, with virtually no new transmissions in May.

On its research report issued on Wednesday its worst-case projection was that the virus stops spreading in late May, and optimistically in March.

“In turn, this suggests that the peak impact on economic activity across Asia-Pacific will be in the first and second quarters. Growth should stabilize later in 2020 and recover through early 2021 as the temporary effect on activity wanes, ” it said in its report on key takeaways on the coronavirus impact.

S&P Global Ratings acknowledged the situation was obviously a fluid one and its base-case projection was that the coronavirus crisis will “stabilise globally in April 2020, with virtually no new transmissions in May”.

In China, lockdowns and quarantines have depressed passenger flows in air and rail, and have closed property sales offices.

“This supports our view that the economic hit will be felt most keenly in household-related spending.

“Relief measures including tax cuts and subsidies are likely. However, if the disease is not swiftly brought under control, slower economic growth would exacerbate already weaker fiscal performance in many parts of the Asia-Pacific, ” it said.

S&P said its report covered its initial takeaways of the impact on sectors including banking, property, gaming, hotels, retail, tourism and transport.

It also looked at the sovereign impact and global retail losses from the contraction in the number of Chinese travellers.

Meanwhile, Reuters reported on Wednesday Asian stocks steadied as Chinese shares moved higher on hopes of additional stimulus to cushion the economic blow from a coronavirus outbreak, but risks remain as the illness continued to spread and the death toll neared 500.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.6%. Shares in China rose 1.66% while stocks in Hong Kong climbed 0.52%.