Asian Markets Surpass Coronavirus Outbreak; China Central Bank Hikes Lending
Upliftment of certain travel and work restrictions in China has improved the condition of Asian markets lately. By heavily weighing over shares, coronavirus outbreak has impacted the business and finance sector of China. Reports claim that Asian shares showed certain respite yesterday.
Gripping the Hubei province as its epicentre, the deadly virus has taken lives of more than 900 people so far. The eased travel restrictions by the Chinese government seem to have initiated regularity into the lives of white-collar workers as some went to offices and others worked from home.
Putting a reverse gear to its earlier losses, the broadest index of Asia-Pacific shares came down 0.5 percent. Marking some improvement from 0.8 percent, Japan’s Nikkei was off 0.4 percent.
Sources claim that China’s indexes still seem to be suffering as the blue-chip index added 0.4 percent and Shanghai’s SSE Composite hiked 0.3 percent. As per an analyst at stockbroker Argonaut, James McGlew, “Markets have turned around a bit reflecting the news that Chinese businesses were returning to work. Overall, I think, there is still a concern out there that the impact from the coronavirus hasn’t been fully quantified.”
The S&P recorded a 0.5 percent drop and Nasdaq fell 0.5 percent. Early losses recorded last week were reversed by E-mini futures for S&P 500 by 0.1 percent.
In an attempt to combat the economic impact of coronavirus outbreak, China’s Central Bank has introduced some measures such as reduction in interest rates. Sources claim that it will now issue special funds to banks for re-lending to firms. Sources claim that in the banks re-lending programme, it will issue loans worth 300 billion yuan (S$59.6 billion).
First batch of the special re-lending funds will be provided today by the People’s Bank of China. Weekly facility will be offered by the end of this month. As stated by the Deputy Governor of PBOC Liu Guoqiang, nine major national banks and certain local banks in ten provinces and cities are qualifying for the funding.
Previously, PBOC affirmed that it will ensure that funds are directed to production and business activities affected by the coronavirus outbreak. The bank specified that loans up to 100 basis point must be offered by financial institutions below the one-year Loan Prime Rate.
The Deputy Governor added that any flouting of rules post the execution of funding facility will be adequately penalised. Moreover, the bank has instructed financial institutions to avoid “blindly” cutting off loans from industries.
Even though China Central Bank is making dire efforts to surpass further potential losses to the economy by its re-lending programmes, the Asian markets will take a longer than expected time to overcome recent losses. Considering the economic damages caused by the US-China trade war, the coronavirus outbreak is a huge blow to the Chinese finance sector.
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