The reports of Covid-19 resurgence in some Asian countries have worried investors, and as a result, Asian stocks slumped on several exchanges. Several Asian stock markets reported the stress is mounting as virus spread rises.
Several countries in Asia have reported rising cases of Covid-19 infection, disrupting the market. In Japan, stocks slumped in the Tokyo exchange with probable lockdown in Tokyo, Osaka, and surrounding areas. MSCI’s broadest index of Asian stocks outside Japan fell 0.6 percent, while Australian and Chinese stocks also traded in the red.
Asian stocks in the US futures market went down as investors retreated after the news of a surge in COVID cases in Asian countries surfaced. The rising optimism with vaccination in western countries is gradually shifting to concern as more cases get reported. Recently, Crude oil futures extended decline throughout April-May 2021, after a month’s high, with the reported second COVID wave in India, which is the third-largest importer of crude oil. In addition, the lockdowns and reinforcement of travel restrictions have also impacted the energy segment.
Doubts on Chinese vaccine
China was one of the first countries to introduce the COVID-19 vaccine. However, recently, for the first time, a top Chinese official has issued a statement stating that the vaccine’s efficacy is low compared to peers. It’s a rare revelation, coming from the country that continues to fight against virus spread.
Japan struggles to control infection
Japanese stocks slumped as the country struggles to curb the infection rate. Per the latest reports, daily infections can cross 28,000 marks if no immediate measures are taken. Moreover, slow vaccine rollout rate in the Asian countries, imposes a threat of rising cases as reports of mutant variants come out.
India in the grip of the second COVID wave
Many regions of the country were in the grip of the second wave of COVID. For example, Delhi, Mumbai, Bengaluru, and many other towns reported the highest numbers since April-June, 2020.
The rising number of cases, coupled with slow-paced vaccination, had halted the country’s economic recovery process. India, one of the major importers of crude and consumer of energy, is currently under healthcare stress.. Analysts predict that currencies of major crude importers will decline further as the Asian market struggles under the pandemic. The dollar index, against the basket of six major currencies, has also strengthened.
As uncertainties keep mounting, it is wise to make conservative investment choices. It is an excellent time to take the profit out from the equity market and put in traditional investment tools, even if it generates lower returns. However, the equity market is expected to remain buoyant with liquidity and abysmally low-interest rates. Despite ongoing pandemic conditions, the Indian equity market registered a total rise in foreign portfolio investment from last year’s records.