COVID-19: ‘Chinese economy to take at least one-quarter hit’

Mumbai, Feb 17 (SocialNews.XYZ) Highlighting the impact of new coronavirus on China and its ripple effect on other Asian countries, including India, a report by Emkay Global Financial Services on Monday said that the Chinese economy will be disrupted and affected for at least a quarter.

The report noted that China's greenfield investments in Asia rose three times in 2018, and that Asia accounts for 74 per cent of China's outbound foreign direct investment.

India could thus see repercussions of a slowdown from the region rather than just China's slowdown, it added.

"While vaccines for COVID-19 are being worked upon, the more likely end to the outbreak could be with the onset of summer (SARS daily infections peaked in mid-April 2003). SARS experience shows that economic activity bottomed a month after the news flow peaked. Thus, we should be looking at a minimum one quarter of disruption to the Chinese economy and supply chains, more likely a bit longer," it said.

The report noted that steel and aluminium companies could be at risk from a slowdown in demand and cooling-off of prices.

"In the auto space, TTMT and (to a smaller extent) Motherson could be hit. ONGC/OIL's earnings could get hit by weak crude prices," it said.

However, the report said, the cooling-off in crude prices should benefit FMCG companies, including Asian Paints, Berger and Pidilite more than others and tyre companies, including Apollo.

Higher refining and marketing margins could support OMCs, while lower LNG prices could help Gujarat Gas Ltd, GSPL and battery makers such as Exide, Amara should see improved margins on lower lead costs.

Source: IANS