Coronavirus Hits South Korean Markets Despite Easing Of Crisis

The spread of the corona crisis spooked the Korean stock market going into the weekend as share prices dropped another 3.43% and short-selling soared to 109 trillion won, $893 million.

The Korea Overseas Stock Price Index closed at 1,771.44 and the Kosdaq at 524 points, down 7%, prompting the Financial Supervisory Commission to impose a six-month ban on short-selling, the first such drastic action in nearly nine years.  The S&P Global Ratings added to the dire outlook, predicting that “household spending” in Korea and Japan would weaken amid “external headwinds” around the world.

A sign of the problem was that international flights were canceled from Seoul’s convenient Kimpo Airport, a largely domestic terminal used for hops to Japan, China, Taiwan and Hong Kong. International flights are still going on a reduced basis from the much larger Incheon International Airport, twice as far from downtown Seoul.

The sense of crisis persisted even though the daily increase in cases decreased markedly–just 110 new ones by Friday for a total of 7,979, including 67 fatalities, mostly older people already suffering from other illnesses.

There was talk, however, of declaring Daegu, Korea’s fourth-largest city, and the surrounding area, 170 miles southeast of Seoul, a “special disastrous zone.”

The majority of cases are traceable to the Daegu center of a fringe Christian sect, Shincheonji, some of whose members had visited Wuhan, the epicenter of the virus in China, for meetings with converts in a “house church” there. By Friday, most of the 200,000 members of the sect throughout South Korea had been tested for the virus, accounting for many of the new cases.

Global concerns, however, led South Korea’s President Moon Jae-in to warn the virus “could deal an unspeakable blow to the global economy and the Korean economy.”

The virus has hit Korean industry hard. Hyundai Motor, having shut down its factories as the outbreak intensified, saw exports drop 21.4% in February from the same month last year, according to Yonhap news agency. Total motor vehicle exports dropped 27.4% in the first two months of 2020, continuing a downward trend dating from August 2019.

“Now is an emergency,” Moon was quoted by a spokesman as saying in a meeting with top officials. “We should do unprecedented things.” Earlier, he said “domestically we’ve contained the blaze of COVID-19 and sought to curb the further spread,” but Koreans still have a lot to fear.

That was clear when the government asked bureaucrats to work from home as much as possible and rotate in and out of their offices only when necessary. Also, the need for “facial recognition” was suspended so government workers could keep their face masks on when passing through security checks at entrances to buildings.

All that seemed like a good idea as the number of those suffering from the virus rose to 23 at the main government complex and 105 at a call center in Seoul that’s now described as a source of a “cluster infection.”

As a symbol of the desire for good relations between Korea and China, the source of the global pandemic, China’s ambassador to Korea, Xing Haiming, said his country is donating 25,000 face masks to Korea.

That’s in return for Moon donating millions of face masks to China in the early days of the virus before anyone realized the extent of the threat to South Korea–a move for which he’s been much criticized. Xing made much of the relationship between South Korea and China, saying as long as the two “protect each other, look after each other, we can definitely win.”