Briefs

Never mind the coronavirus-fuelled volatility. With the slide in Asia stock prices, analysts have turned increasingly bullish on the shares.

“Buy” ratings make up almost 70% of about 26,000 analyst recommendations for equities in the MSCI Asia Pacific Index, according to data compiled by Bloomberg. That is the highest proportion since at least 2010, and up from about 66% at the end of last year, before the global outbreak started.

Analysts have grown increasingly bullish on individual stocks this year as the virus spread, depressing valuations. At the March trough, the MSCI Asia Pacific Index traded at less than 11 times estimated earnings for the next year, the lowest level since 2012. While it has now rebounded to 13.7 times, it remains below previous highs.

Buying the sell-off has paid off for investors recently, with the Asian benchmark now up 20% from its four-year low last month. Despite concerns that investors in crowded trades are vulnerable to a potential second wave of selling, the overall positive nature of analysts’ ratings makes sense given this will not be a traditional recession, said Stephen Innes, chief global market strategist at AxiCorp.

“These are historical times,” Innes said. “In the past, when we get into recessions they are multi-faceted, it’s not just one sector of the economy that’s imploding. But this time around, the recessionary input is the virus. It’s governments that have shut the economy down, which makes it unique.”

This also explains why analysts are targeting specific industries that are more geared to leverage growth after the virus outbreak. Their favourite is health care, with about 75% of ratings a buy, while the industrials, information technology and real estate sectors are also above 70%, the data show. Financial firms are the least attractive, with 65% buy recommendations.

Health-care equities are appealing because of the hunt for a Covid-19 cure and the related products and services needed to combat the outbreak, Innes said. Then there is tech, which has come to the forefront as millions use virtual conferences and other online tools to work from home. Finally, industrials are attractive as countries emerging from the virus’ shadow will start to fire up their domestic industries in an economic recovery, he added. “Buy what makes sense,” he said. “These kinds of things resonate in a pandemic.” — Bloomberg

Virus likely to make annual comeback, warns top Chinese scientists

Chinese scientists say the novel coronavirus will not be eradicated, adding to a growing consensus around the world that the pathogen will likely return in waves like the flu.

It is unlikely the new virus will disappear the way its close cousin SARS did 17 years ago, as it infects some people without causing obvious symptoms like fever. This group of so-called asymptomatic carriers makes it hard to fully contain transmission as they can spread the virus undetected, a group of Chinese viral and medical researchers told reporters in Beijing at a briefing on April 27.

With SARS, those infected became seriously ill. Once they were quarantined from others, the virus stopped spreading. In contrast, China is still finding dozens of asymptomatic cases of the coronavirus every day despite bringing its epidemic under control.

“This is very likely to be an epidemic that co-exists with humans for a long time, becomes seasonal and is sustained within human bodies,” said Jin Qi, director of the Institute of Pathogen Biology at China’s top medical research institute, the Chinese Academy of Medical Sciences.

A consensus is forming among top researchers and governments worldwide that the virus is unlikely to be eliminated, despite costly lockdowns that have brought much of the global economy to a halt. Some public health experts are calling for the virus to be allowed to spread in a controlled way through younger populations like India’s, while countries like Sweden have opted out of strict lockdowns.

Anthony Fauci, the director of the US National Institute of Allergy and Infectious Diseases, said last month that Covid-19 could become a seasonal ailment. He cited as evidence cases now showing up in countries across the southern hemisphere as they enter their winter seasons.

More than three million people have been sickened and over 210,000 killed in the global pandemic.

While some, including US President Donald Trump, have expressed hope that the virus’s spread will slow as the temperature in northern hemisphere countries rises in the summer, Chinese experts on April 27 said that they found no evidence for this.

“The virus is heat-sensitive, but that’s when it’s exposed to 56°C for 30 minutes, and the weather is never going to get that hot,” said Wang Guiqiang, head of the infectious diseases department of Peking University First Hospital. “So globally, even during the summer, the chance of cases going down significantly is small.”

Community care facilities for Covid-19 patients to double; more cases may surface through extensive testing

Singapore is ramping up its efforts in caring for Covid-19 patients as the number of cases here inches towards the 15,000 mark. One way it is doing so is doubling bed spaces at community care facilities meant for those with mild symptoms and low-risk factors to 20,000 by endJune, said Brigadier-General David Neo, director of joint operations at the Singapore Armed Forces (SAF) at a Covid-19 multi-ministry task force briefing on April 28.

Presently, there are 10,000 such bed spaces at places like D’Resort NTUC chalet in Pasir Ris, Halls 1–6 at the Singapore Expo, and Changi Exhibition Centre. Neo noted that these places were set up quickly – with Singapore Expo being ready within a week while the Changi Exhibition Centre took two weeks. Collectively, this increases bed spaces for isolation and care needs from the present 18,000 to 23,000. Aside from this, the authorities said swab isolation facilities — where patients awaiting their swab tests results are housed — will increase to over 7,000 from some 4,000 at present. Such facilities include units at hotels and hostels with attached toilets.

The government is now actively stepping up screenings for Covid-19 among workers in essential services and seniors, and Health Minister Gan Kim Yong warns that the number of cases may head north. “As we step up our screening and testing, we are likely to see more cases being detected which otherwise would not have been detected,” he said.

As at 12pm on April 29, the republic reported 690 new cases, taking the total count of Covid-19 infections here to 15,641. Of the new cases, a vast majority are among migrant workers living in foreign worker dormitories, while 10 are Singaporeans or permanent residents. — Amala Balakrishner

Overall unemployment rate rises to 2.4% in 1Q2020

Singapore’s overall seasonally-adjusted unemployment rate rose a smidgen of 0.1 percentage points to 2.4% for 1Q20 ended March, extending the already soft market conditions seen in late 2019.

Unemployment among both residents and citizens was up in 1Q20, according to preliminary numbers released by the Ministry of Manpower (MOM) on April 29. The jobless rate for residents hit 3.3% from 3.2% in 4Q19, while that for Singaporeans reached 3.5% from 3.3% over the same period.

Still, the unemployment rate remains lower than the 4.8% recorded in 3Q2003 after the SARS pandemic, as well as the 3.3% seen in 3Q2009 at the height of the Global Financial Crisis (GFC).

During the quarter, total employment contracted sharply by 19,900, amid a reduction in foreign employment. This marks the republic’s largest quarterly contraction since the SARS pandemic which saw hiring plummet by 24,000 in 2Q2003.

The decline was the most pronounced in the services sector, particularly the F&B, retail and hospitality sectors suffering from a significant reduction in consumption after the Covid-19 outbreak. Meanwhile, the manufacturing and construction sectors also saw reduced hiring amid stalled operations in 1Q20.

However, bright spots were seen in the healthcare, public administration and professional services sectors, which have seen heightened demand since the outbreak of the pandemic.

MOM cautions that those who remain employed may have experienced a reduction in their working hours or an adjustment to their salary.

Aside from employment, retrenchments for the quarter hit 3,000 – higher than the 2,670 shed in 4Q19, and significantly lower than the 12,760 quarterly peak during the GFC. Of this, the majority comes from the services sector as industries such as retail trade and F&B were affected by the fall in consumption from the imposition of the safe distancing measures from mid-February. “With jobs and wage support measures announced in Budgets, and companies encouraged to retain workers and retrench only as a last resort, layoffs did not see a sharp increase in this first quarter,” notes MOM. — Amala Balakrishner