As we move into the heart of this year, there are clear stock market winners and losers. Some hard-hit economies including the United States stand to win as they open back up first. This month, with COVID-19 making a comeback, many Asian markets have been losing.
The slow rollout of vaccines in many Asian nations will hold them back economically. Nations such as Britain and the United States, on the other hand, have borne a terrible brunt of the disease but now stand to open up far quicker, with impressive vaccination rates.
Asia dealt pretty well with the first effects of COVID-19. New Delhi even became the first major city around the world to approach herd immunity, with a government survey showing in February that 56% of the population had antibodies to COVID, suggesting more than half its 28.5 million residents had already had the virus. Other nations such as Japan and South Korea kept infections low - but that's so last year.
In Tokyo, the specter of renewed pandemic restrictions caused the broad Topix index to fall 2.0% on Wednesday, and 3.7% this week. The index, which represents all of Japan's major stocks, is now down 6.2% in the past month.
Osaka, Japan's "second city," is requesting the government to declare a state of emergency for the third time. For the most part, Japan's emergency requests are voluntary, asking people to wear masks and stay home, but new laws toughened in February at least allow authorities to insist that business owners close or cut back service hours. This stop-start process of emergency, no-emergency, emergency again is beginning to frustrate people, and make them less compliant with voluntary measures.
India is worst-hit by this latest phase of the disease. The Sensex was down 0.5% on Tuesday, and is closed for a holiday today, leaving it looking at a 4.3% drop in the last month.
The country has had more than 200,000 new COVID infections, today including opposition leader Rahul Gandhi, every day for the last six days. British Prime Minister Boris Johnson has been forced to cancel a trip to New Delhi because of the COVID situation, and Indian Prime Minister Narendra Modi has decided to stay closer to home rather than jet off to Portugal for a meeting with European leaders.
Equities in Indonesia (down 5.7% in the last month) and Malaysia (down 1.5% in a month) have also fallen into negative territory in Q2. Singapore and Thailand are essentially flat, and headed in that direction.
Thailand has inoculated only 0.8% of its population so far, and is seeing a surge in infection after the holidays surrounding Songkran, the Thai new year, on April 13. That has scuppered plans to introduce travel bubbles with other nations that are critical for a country that generates around 13% of its economy from tourism.
The government is under fire for not ordering enough vaccines in the first place. Prime Minister Prayuth Chan-ocha, previously chief of the Thai army and military junta, says Thailand is negotiating with Pfizer (PFE) to land 5-10 million doses to arrive in the second half of the year. That's already too late to ensure an early opening up.
Malaysia has seen its parliament locked out under a state of emergency that has run since early January. There's a strong suspicion that the weak government is only too happy for the "emergency" to continue so it can stay in power. However, a real COVID emergency is intensifying, with COVID cases doubling since the political emergency went into effect.
Indonesia is also revising down its forecast for growth this year because private consumption is lagging. The vaccination effort across the world's largest archipelago is perilously slow. The country has administered 6.4 vaccine doses per 100 people, covering only 4.1% of the population with a first dose.
That figure is a commendable 64 doses per 100 people in the United States, and 65 in the United Kingdom, according to very handy New York Times vaccination tracker. Britain has taken a different tack in that it is attempting to give a first dose to as many people as possible, so 50% of Brits have had one dose and 15% are fully vaccinated. In the United States, with the normal two-dose regimen, 40% have had their first shot and 26% of people are totally covered.
These are the countries that can remove facemasks and get on planes with confidence first. The United States may end up better off, soon, than before the whole outbreak began.
Here in Hong Kong, we recently crossed one million doses administered to a population of 7.4 million. Both the Pfizer-BioNTech (BNTX) and Sinovac vaccines we can select require two doses, so only 5.3% of people have achieved that.
I'm one of them, but vaccine hesitancy is enormous here in Hong Kong, not least because people simply don't trust the government. The disease has also killed "only" 209 people, and infected 11,700, so it doesn't feel real to a lot of folks. It hasn't hit home.
I think it'll take travel bubbles to speed up vaccine acceptance here. It irritates me to hear people with an anti-vax agenda talking about "vaccine passports," because for the most part we're not talking about a document that you absolutely have to have in order to travel (like a passport, internationally). We are talking about a certificate that may make it easier to travel, with Hong Kong suggesting a reduction of one week for the quarantine time for travelers. So it's a "vaccine certificate," which doesn't sound nearly so dramatic or foreboding as a "passport." If that enables you to travel quarantine-free, its popularity will surge.
Only then will Asia be able to get back to normal. This is a region with 48 nations spanning a huge geography, not to mention just under 60% of the global population. If the world wants to get back into business, it should be invested in whether the 4.6 billion people in Asia gets shots in their arms. It will give economies and stock markets the world over a shot in the arm, too.