Asia Weekly Coronavirus Watch: The peak seems to have been past for most and even the second wave for some Asian economies

• The number of coronavirus cases has surpassed 3 million, but the world seems to be closer to the infection peak. Developed countries are gradually rolling out plans to ease mobility restrictions. In Asia, Malaysia also relaxed its partial lockdown before the scheduled end of the movement control order on May 12th. But the situation is still concerning for a few developing countries. For example, India will extend the nationwide lockdown beyond May 4th for another two weeks, albeit with some form of relaxations in a few less affected areas.
• The economic fallout due to the unprecedented global lockdown is now more evident for EM Asia, especially for those reliant on foreign income. In Thailand, foreign tourist arrival tumbled by 76% YoY in March and the impact is particularly large due to the relatively huge exposure. In Korea, exports fell 25 % YoY in April not only due to fewer working days domestically but also the extensive shutdown of its major trading partners in the West. The good news is Korea’s domestic demand is less impacted since its government did not take suppression measures with only moderate decline in retail sales and industrial production. As for Hong Kong, GDP shrank by 8.9% YoY in Q1, with massive contraction in private consumption and external trade due to the restrictions on outdoor activities and worsening foreign demand.
• Compared with the others, the economic situation continued improving in China. The high-frequency indictors such as coal usage for electricity generation, and the housing transactions have been improving over the past week, and the official manufacturing PMI has, again, reached above 50, the threshold contrasting expansion from contraction in April. However, this is not an assessment without caution. The Caixin manufacturing PMI, an indicator more representative of private and export-oriented firms, shrank to 49.4. Moreover, the new order sub-index (50.2) was weaker than the production sub-index (53.7), signaling slower recovery in demand than supply. The new export sub-index was as weak as 33.5, showing the ongoing fragile external demand.
• Most Asian equity indexes were resilient at the beginning but reverted over the concerns of renewed tension between US and China. As for the forex, the IDR improved further by 3.3% from the prior collapse caused by the USD liquidity strain, while MYR and IDR weakened against the greenback due to lockdown measures domestically.
• On April 27th, the China Securities Regulatory Commission (CSRC) proposed to introduce the registration-based IPO system to the ChiNext board. This move aims at encouraging direct financing for private firms in the technology sector. In Japan, the Bank of Japan (BoJ) announced a number of actions intended to reduce the perception of corporate risk stemming from the rapid decline in sales and liquidity shortage. First, it removed the JPY 80 tr target purchase of JGBs, which gives the central bank more flexibility to stabilize the JGB market. Second, the BoJ announced the expansion of commercial paper and corporate bonds to calm credit markets. Lastly, the bank strengthened the liquidity facility to support SMEs by expanding the facility from JPY 8 tr to JPY 23 tr.

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