Helping Self-Directed Investors Succeed Blog - South East Asian Economies Pressured by Virus Crisis as of February 14th, 2020

South East Asian Economies Pressured by Virus Crisis as of February 14th, 2020

May 10th, 2019

Sadly and unfortunately, the Corona Virus outbreak has already killed over 1500 people in China and has created a health care crisis of sorts in the world's second largest economy. The Chinese Government is facing one of the stiffest challenges it has ever faced in recent times in containing this outbreak. The economic fallout is still not clearly ascertained but it is becoming evident in the short term this is likely to cause a major dent in the Chinese economy.

The economic impact of this outbreak is already being felt in nearby South East Asian economies which have very close economic and in some ways cultural ties with China. Economies of Singapore, Malaysia, Indonesia, Thailand, Phillipines, and Vietnam appear to have taken a direct hit. Not only business travel but also movement of goods and services are expected to become severely restricted until China gives the green signal.

ETFS providing exposure to aforesaid economies have corrected sharply in recent weeks. Singapore ETF (EWS) is down -4.47% for the year. Vietnam ETF (VNM) has fallen -4.50%. Malaysia ETF (EWM) has dropped -5.12%. Indonesia ETF (EIDO) and Phillipines ETF (EPHE) have pulled back over -6%. Thailand ETF (THD) has corrected the most by nearly -9%.

It is very likely these battered economies will respond swiftly by announcing economic stimulus measures but it is too early to call a bottom as China is continuing to battle this deadly virus outbreak with no clear victory in sight yet.

Clearly, two South East Asian economies have not taken the heat much from this crisis and these are Japan and South Korea. Japan ETF (EWJ) is down by -1.33% and South Korea ETF (EWY) has shed a miniscule -0.16% for the year and these are clearly displaying better relative strength.

Nevertheless, self-directed investors will want to keep a close eye on these above referenced ETFS which may become attractive from a value perspective soon after China turns a corner in managing this damaging health care crisis.

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