Shares of transportation and travel-related stocks plunged more than 5 percent yesterday on the local bourse on concerns that a wider swine flu outbreak could discourage travel.
But a Standard Chartered Bank report released yesterday showed that Asia and the Middle East could be the regions best able to weather the latest health shocks.
Yesterday’s decline on the local bourse was across the board, with foodstuff shares falling 4.8 percent and construction issues dropping 4.2 percent, while financial shares dipped 1.5 percent and tech-related stocks shed 1.3 percent.
The only beneficiaries were hygiene and medical-related companies on expectations that demand for their products may surge to deal with any outbreak of the disease.
The benchmark TAIEX ended 108.32 points, or 0.9 percent, lower at 5,596.73. Turnover was NT$126.94 billion (US$3.76 billion), with foreign investors buying a net NT$5.55 billion in local stocks.
“The correction may last for a month before the dust of the swine flu settles,” said Mars Hsu of Grand Cathay Securities (大華證券).
The Standard Chartered report, co-authored by analysts Gerard Lyons, Mike Moran and Alex Sienaet, said based on lessons from previous outbreaks, tourism and related industries would face the first round of impact, followed by discretionary spending.
The analysts said they believed the flu was still in its early stages and its economic impact would vary greatly depending on its severity and duration, although the economic impact may be seen as V-shaped.
“The downward leg of the V is when discretionary spending is hit and confidence suffers, deterring travel and hitting tourism. Then, after the scare is addressed there is a rebound,” they wrote in the report.
Standard Chartered said the health scare was hitting the world economy at a bad time and would surely hit confidence, one of the factors that will heavily influence the timing of the end of this global recession.
Asia may face a test in coming weeks as there is a general feeling that the authorities here learned well from both SARS in 2003 and the avian flu in terms of their ability to prevent, monitor and react to such a health scare if the present outbreak hits Asia, the report said.
But the bank warned that the latest incident also posed a greater concern in terms of the fiscal fragility of governments that will roll out relief packages to prevent and contain the health problem.
In 2003, for instance, Malaysia spent an additional 2 percent of its GDP to address the disease while Hong Kong and Taiwan spent roughly 1 percent and 0.5 percent of GDP respectively on similar measures.
“The risks are naturally greater for economies where budget deficits are already high,” the report said.
MANAGING RISKS: Taiwan has secured LNG sufficient to cover 95 percent of electricity demand for next month, UBS said, describing the government’s approach as proactive UBS Group AG has raised its forecast for Taiwan’s economic growth this year to 8 percent, up from 6.9 percent previously, and said expansion could reach as high as 8.6 percent if external energy shocks are avoided. The upgrade reflects a stronger-than-expected first-quarter performance and sustained momentum in artificial intelligence (AI)-driven exports, which UBS said are providing a firm foundation for growth despite geopolitical and energy risks. Taiwan’s GDP expanded 13.69 percent year-on-year in the first quarter, the fastest growth since the second quarter of 1987, the Directorate-General of Budget, Accounting and Statistics (DGBAS) reported on Thursday. On a seasonally
The Fair Trade Commission’s (FTC) ongoing review of Grab Holdings Ltd’s US$600 million acquisition of Foodpanda Taiwan’s operations, announced on March 23, has taken on fresh urgency as industry experts warn that the transaction could embed significant Chinese cybersecurity vulnerabilities into Taiwan’s digital infrastructure through Grab’s deep ties to autonomous-driving firm WeRide (文遠知行). Less than 16 months after the FTC blocked Uber Eats’ direct attempt to acquire Foodpanda Taiwan — citing potential combined market shares of 80 to 90 percent — the emergence of Grab as the buyer has prompted questions about whether the same competitive harm is simply being rerouted
The list of Asian stocks that benefit from business partnership with Nvidia Corp is getting longer, as the region further integrates into the artificial intelligence (AI) chip giant’s business ecosystem. Just in the past week, South Korea’s LG Electronics Inc, Taiwan’s Nanya Technology Corp (南亞科技), as well as China’s Huizhou Desay SV Automotive Co (德賽西威) and Pateo Connect Technology Shanghai Corp (博泰車聯) have become the latest to rally on news of tie-ups, supply-chain participation or product collaboration with the US chip designer. Asian suppliers account for about 90 percent of Nvidia’s production costs, up from about 65 percent last year, data compiled
POWER BUILDUP: Powered by Nvidia’s B200 Blackwell chips, the data center would support MediaTek’s computing power demand and business growth, the company said Smartphone chip designer MediaTek Inc (聯發科) yesterday launched a new artificial intelligence (AI) data center with a maximum capacity of 45 megawatts to meet its rising demand for computing power required to develop new advanced chips for AI applications. The company has completed the first-phase computing power buildup at the data center in Miaoli County’s Tongluo Township (銅鑼), providing 15 megawatts of capacity to support its research and development (R&D) capabilities, despite an industrywide shortage of key components, MediaTek said. Supply constraints have plagued a wide range of key components, including memory chips, solid-state drives, power supply units and central
RSS