Asian Shares Boosted by Easing Concerns Over Coronavirus but China Production Worries RemainUncertainty about work resuming at factories in China is setting in, with provinces or cities posting different dates for an extended shutdown as the coronavirus outbreak continues to spread.
The major Asia Pacific stock indexes rose on Tuesday on easing concerns over the economic impact of the ongoing coronavirus outbreak. There are still jitters in the markets, but investor risk appetite is recovering with an apparent slowdown in the rate of coronavirus infection, even as the death toll rose.
On Tuesday, Hong Kong’s Hang Seng Index settled at 27583.88, up 342.54 or +1.26% and South Korea’s KOSPI Index closed at 2223.12, up 22.05 or 1.00%. The markets in Japan were closed.
In China, the Shanghai Index settled at 2901.67, up 11.19 or +0.39% and in Australia, the S&P/ASX 200 Index finished at 7055.30, up 42.80 or +0.61%.
Uncertainty Remains over When Work Can Resume at Factories in China
Uncertainty about work resuming at factories in China is setting in, with provinces or cities posting different dates for an extended shutdown as the coronavirus outbreak continues to spread.
Authorities had initially said operations could pick up again on Monday, but the already-extended delay in reopening could be dragged out even further for many factories – including Apple’s largest manufacturer Foxconn.
Even if businesses were up and running again, their workers would still have to fulfill quarantine requirements of around two weeks.
With the further delay, analysts warned of a big hit not just to the Chinese economy, but globally.
Last week, more than 20 provinces and other regions told businesses to not resume work before February 10 at the earliest. In 2019, those parts of China accounted for more than 80% of national GDP, and 90% of exports, according to CNBC calculations of data accessed through Wind Information.
Some provinces and districts have now told companies to not return to work until March 1, according to officials.
Traders Focusing on Foxconn
Major companies like Taiwan-listed Hon Hai Precision Industry, better known as Foxconn and the world’s largest iPhone assembler are clearly on the radar.
Reuters reported Monday, citing a person familiar with the matter, Foxconn received approval to resume production at a facility in Zhengzhou. But the company is still “trying hard” to get clearance to reopen plants in other parts of China, Reuters reported.
Foxconn did not directly confirm its plans to restart operations, but it told CNBC in a statement: “The operation schedules for our facilities in China follow the recommendations of the local governments, and we have not received any requests from our customers on the need to resume production earlier.”
iPhones and Autos Remain at Risk
In a note on Sunday, Wedbush Securities wrote that this development could be “a shock to the system and disrupt the supply chain further for Apple” for both iPhones and AirPods which were already facing a shortage.
In the autos sector, Toyota and BMW said they are extending the shutdowns for plants in China until next week – among several automakers who said they were delaying reopenings.