Asian markets battered in knee-jerk reaction to new Covid variant

ASIA markets closed the week battered by fears of a new Covid-19 variant spreading in South Africa and emerging in Hong Kong triggered a major sell-off in the region. 

Scientists have warned that the new B11529 strain could be more infectious than the Delta variant, and more resistant to vaccines.

All major stock exchanges in the Asia-Pacific region fell into negative territory on Friday (Nov 26), with India’s S&P BSE Sensex registering the sharpest slide. The index closed 2.9 per cent lower at 57,107.15, down 1,687.94 points. 

Following closely behind was Hong Kong’s Hang Seng Index, which slumped 2.7 per cent or 659.64 points on the day to 24,080.52. The Hong Kong government on Thursday reported 2 cases of the new variant. 

In Singapore, the Straits Times Index tumbled 1.7 per cent or 55.25 points to close at 3,166.27 points as fresh coronavirus fears infected markets across Asia. 

The index, which tracks the performance of the top 30 companies listed on the Singapore Exchange (SGX), hit a low of 2.1 per cent on the day, the highest percentage decline seen in a day since the 2.2 per cent decline on May 14, said SGX market strategist Geoff Howie.

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Healthcare-related counters and pandemic darlings such as glove and protective gear manufacturers emerged as the top gainers in Singapore on Friday following renewed fears; while hospitality, aviation and travel-related plays dived, erasing recent recovery gains.

Glovemaker Top Glove Corporation BVA closed 15.2 per cent or S$0.11 higher at S$0.835; UG Healthcare 8K7 closed 27.5 per cent or S$0.07 higher at S$0.325; while Riverstone AP4 en : AP4 0%ded the day 2.9 per cent or S$0.02 higher at S$0.71.

Property developer Aspen Group 1F3 , which has a glove-making unit, closed 11.3 per cent or S$0.013 higher at S$0.128. Meanwhile, protective gear manufacturer Medtecs International 546 w : 546 0%as one of the most actively traded by volume, closing 37.9 per cent or S$0.11 higher at S$0.40, with 57.6 million shares changing hands. 

These plays had given up a chunk of their pandemic gains following vaccine rollouts and reopening. On Thursday, UOB Kay Hian (UOBKH) maintained its “underweight” recommendation on Malaysia’s glove sector, as it believes average selling prices of gloves were normalising. 

Parkway Life Reit C2PU : C2PU 0%, which has hospitals and nursing homes under its portfolio, ended the week 0.4 per cent or S$0.02 higher at S$5.00.

Genting Singapore G13 : G13 0%, which operates Resorts World Sentosa, was also among the most heavily traded. The counter declined 4.2 per cent or S$0.035 to close at S$0.795, with 56.4 million shares changing hands. 

Aviation counters such as national carrier Singapore Airlines C6L fell 3.8 per cent or S$0.20 to S$5.05; SATS S58 dropped 2.2 per cent or S$0.09 to S$3.98; while SIA Engineering S59 los : S59 0%t 2.1 per cent or S$0.05 to S$2.30. 

Hospitality-related stapled groups also lost some ground. CDL Hospitality Trusts J85 closed 2.5 per cent or S$0.03 lower at S$1.17; Frasers Hospitality Trust ACV slid 2 per cent or S$0.01 to S$0.48; and Far East Hospitality Trust Q5T cl : Q5T 0%osed 3.2 per cent or S$0.02 lower at S$0.605. 

"All we know so far is the B11529 is heavily mutated, but markets are taking no chances," said Oanda Asia-Pacific senior market analyst Jeffrey Halley. 

He added that with the Delta wave in mind from earlier this year, investors are likely to "shoot first and ask questions later" until more is known about it.

Halley expects haven currencies to outperform, while emerging market FX and commodity or risk-sentiment currencies are likely to have a tough day at the office.

READ MORE: 

• Singapore bans entry from South Africa and 6 other African countries amid new Covid variant from that region
• New virus variant boosts sagging glove maker stocks in South-east Asia
• What do we know about the new Covid-19 variant from South Africa with 'unusual' mutations?
• UOBKH sees further downside risks to Malaysian glove sector, maintains 'underweight'
• UOBKH sees negative risk-reward payoff in Malaysia glove sector, advises minimal exposure