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James Hyerczyk

The major Asia Pacific stock indexes settled mostly higher on Friday and for the week with Japan’s Nikkei 225 Index fading the trend. Concerns around the ongoing coronavirus outbreak continued to weigh on investor sentiment, however, not enough to drive investors out of the market. Buyers may have been motivated by positive moves from China’s government to stem the negative impact of the virus on the economy.

On Friday, Japan’s Nikkei 225 Index settled at 23687.59, down 140.14 or -0.59%. Hong Kong’s Hang Seng Index finished at 27815.60, up 85.60 or +0.31% and South Korea’s KOSPI Index closed at 2243.59, up 10.63 or +0.38%.

China’s Shanghai Index settled at 2917.01, up 10.93 or +0.38% and Australia’s S&P/ASX 200 finished at 7130.20, up 27.00 or +0.38%.

Coronavirus Update

On Friday, the Hubei province reported an additional 116 deaths and 4,823 new confirmed cases as of the end of February 13. This follows Thursday’s upward spike in deaths and new confirmed cases which was fueled after authorities in the province, where it all started, introduced a new method for tabulating case totals.

While some major bank analysts and economists continued to forecast the effect on economic growth from the epidemic on countries most effected by the virus, especially China, others are already trying to predict what the recovery will look like. This suggests that some still feel the number of new cases has peaked. Still some analysts are saying the recovery is too hard to predict because we still don’t know the extent of the damage.”

“I think markets are looking at the playbook of SARS and what we found there was, it was a big hit … to growth in the countries that were most affected but it was a V-shaped recovery,” Rob Subbaraman, head of global macro research at Nomura, told CNBC’s “Street Signs” on Friday. A V-shaped recovery describes downturns that see a steep fall before recovering sharply.

“What we think markets might be missing is the depth of the V could be worse than people think,” Subbaraman cautioned. “The economic data we start getting for February could be a lot worse than people think.”

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Singapore Moves to the Forefront

On Friday, Singapore Prime Minister Lee Hsien Loong said the coronavirus’ economic impact on the island nation’s economy has already exceeded that of SARS in 2003, according to a report by local publication The Straits Times. Singapore has been among the countries worst hit by the disease as it has one of the highest reported number of confirmed cases outside of China. Loong added that a recession could be a possibility.

The impact, particularly over the next few quarters, will be significant as the country battles a “very intense outbreak”, said Prime Minister Lee during a visit to Changi Airport Terminal 3.

“It’s already much more than Sars, and the economies of the region are much more interlinked together. China, particularly, is a much bigger factor in the region,” he said.

“I can’t say whether we will have a recession or not. It’s possible, but definitely our economy will take a hit.”

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