Asian stocks rose on Monday despite the looming threat of tighter restrictions on movement. We're being warned of a new "third wave" of infections in Asia. Both Tokyo and Singapore recorded one-day records for new infections on Sunday.
Still, Sydney shares jumped 4.3% by Monday's close, and the Nikkei 225 of big-caps in Japan similarly advanced 4.2%. The broader Topix of all major shares in Tokyo rose 3.9%, as did the Kospi in Seoul. Singapore's Straits Times index finished up 3.4%, and Hong Kong's Hang Seng ended up 2.1% on a day mainland Chinese markets were closed for the grave-sweeping festival.
Those gains are coming on the back of stimulus measures and slowing infection counts in places such as South Korea and Spain. But there's a push and pull going on.
The "first wave" produced by travelers out of the original epicenter, Wuhan, gave way to a "second wave" of returnee cases to Asia, bringing the Covid-19 disease back home as nations closed their borders. Now a "third wave" of unexplained domestic transmissions appears set to start.
To avoid that, here in Hong Kong as well as well as Japan and Singapore, authorities are buckling and agreeing to tighter restrictions that will hurt their economies short term. Asian nations have largely resisted mass business closures for the months since Dec. 31, when Chinese authorities first reported a viral outbreak in Wuhan to the World Health Organization.
Japanese Prime Minister Shinzo Abe said on Monday that he is set to declare a state of emergency over the Covid-19 virus, an announcement likely to come on Tuesday and go into effect on Wednesday. Emergency status would last for around a month, Abe said.
Singapore applies the brake
Singapore is requiring all non-essential businesses to shut on Tuesday and schools to close on Wednesday. The measures, its strictest so far, will remain in place until May 5 at the earliest.
Singapore also on Monday unveiled its third stimulus package in two months, boosting job support. The latest package is valued at S$5.1 billion (US$3.6 billion), bringing total government spending to S$59.9 billion (U$$42 billion), or 12% of Singapore's entire GDP.
Japan is prepping ¥108 trillion (US$1.0 trillion) in stimulus, equivalent to 20% of GDP. The unprecedented package went to the parties in the ruling coalition on Monday before likely approval on Tuesday. It includes ¥6 trillion (US$55 billion) in cash payouts to households and small businesses and ¥26 trillion (US$240 billion) in deferred tax and social security.
Under a new law, Abe must consult with a panel of experts before declaring an emergency. It's likely to cover seven of the largest prefectures, including greater Tokyo, as well as Japan's "second city," Osaka.
It then remains to the governors of those provinces as to whether to order or request the closure of schools and to place restrictions on business. Most likely the directives will still be "requests" for voluntary action when it comes to the private sector and people's movement. There are decidedly mixed messages in Japan, where many schools re-opened on Monday after being closed for a month, although schools in Tokyo are still closed.
Concern in Tokyo
Japan has only 3,139 confirmed Covid-19 cases and has witnessed 77 deaths. But the dynamic is similar to what's going on in New York, with Tokyo Governor Yuriko Koike sounding a much louder alarm signal than her national head of state. Koike's city administration has strongly urged the 38 million residents of the world's most-populous city to stay home, and the governor says the number of untraceable cases in the city, with no obvious origin, is alarming. But Koike has had little power to do more than make recommendations.
East Asia fared better than expected in battling the early outbreak of the coronavirus pandemic. Even South Korea, the first nation outside China to see a major outbreak, appears to have brought the disease under control. On Monday, it reported 47 new cases, its lowest figure since the outbreak began in February.
The region's early victories will be of little use if new domestic transmission begins again. Hence, the imposition of tougher and tougher restrictions.
Here in Hong Kong, the government has gradually closed bars, gyms, sports facilities and government offices. My kids have been in a classroom for only four weeks since October thanks to last year's protests. But businesses remain open, though they're encouraged to allow work from home, and even restaurants can still operate with spacing of 1.5 meters between tables.
Mainland Chinese markets are closed for the Ching Ming festival. This holiday, a time to honor ancestors by tending to their graves, is aptly timed. But families have been advised not to gather in numbers.
It will be a shortened trading week in Australia, Hong Kong, India and Singapore, ahead of Good Friday and the Easter holiday. Hong Kong and Australia will also be closed on Easter Monday.