The S&P 500 Index may have witnessed its quickest correction ever, but one of the biggest stock-market victims of the coronavirus epidemic has been Southeast Asia.
The tumble this week has pushed equity benchmarks of Thailand, Indonesia and the Philippines to rank among the world’s 10 worst-performing major markets this year. Panic selling has taken the MSCI Asean Index more than 17% below a high reached in July.
The region’s heavy reliance on China for trade and tourism means the disruptions caused by the virus are dealing a bigger blow to its economy. All six of Southeast Asia’s biggest economies count China as their top trading partner. Open capital accounts also don’t help when fear grips markets.
“The markets are starting to price in an escalation in Covid-19 from a regional epidemic to a global pandemic,” said Alan Richardson, a regional fund manager at Samsung Asset Management in Hong Kong. Southeast Asia equities are getting hurt more than others “because they don’t have closed capital accounts,” he added.
The virus epidemic is growing at a rapid pace in countries outside of China. The number of confirmed infections has exceeded 2,300 in South Korea while more cases appeared in Italy, Iran and Kuwait. Nigeria confirmed on Thursday the first reported infection in sub-Saharan Africa, a day after Brazil had the first in Latin America. The benchmark stock gauges of Malaysia and Thailand entered bear markets this week, while those of Indonesia and the Philippines are down 19% from previous highs. Singapore’s index has lost 17% from its May 2018 peak, and Vietnam’s is still down 27% from its high two years ago.
Thailand is among those hit the hardest in Southeast Asia by the plunge in Chinese visitors, while Singapore has warned it is bracing for a 25% to 30% decline in arrivals this year. 
These countries are facing downside pressure for economic forecasts, leading policy makers to unveil support measures. Indonesia announced $742mn of fiscal incentives this week for its tourism, airline and housing sectors hit by the virus.
“I don’t think we have seen the bottom until we see economies entering a recession and the damage of the coronavirus comes out in tangible numbers,” said Manny Cruz, a strategist at Manila-based Papa Securities Corp. “The negative sentiment is pervasive.”
Still, there are some green shoots in Southeast Asia: Indonesia has yet to report any case, while the infection rate in Singapore has slowed and been outpaced by recoveries. But for most investors and analysts, the outlook for Southeast Asian equities remains hazy as the epidemic wreaks havoc on lives and supply chains.
“It’s hard to see a recovery for the market isn’t looking at fundamentals unless the viral scare tapers down,” said Rachelle Cruz, an analyst at AP Securities Inc in Manila. “Investors are pricing the coronavirus will have a widespread impact.”