What can we learn from Singapore

InvestmentWhat investors can learn from Asia about the corona crisis

It was hardly a laboratory accident. US President Donald Trump recently declared that the rampant coronavirus was bred in a laboratory in Wuhan - a thesis that conspiracy theorists around the world enthusiastically embraced. Western secret services, however, consider this genesis to be extremely unlikely. According to them, Sars-CoV-2 probably jumped from an animal to humans.

One thing is clear: the pandemic, which is still keeping the world in suspense, began in China. From there, the coronavirus spread around the globe, according to the latest findings, probably as early as the end of last year. There, the government was also the first to take measures to curb the spread of the virus. Western scientists look to Asia to learn from the epidemic expertise of their Eastern counterparts. Investors should also look to the east. There you can see examples of how the economy and the stock markets could continue in Europe.

The most important lesson that Europeans can learn from the example of Asia is: Just as the pandemic has hit different countries to different degrees, there is no common path during the recovery phase. “Basically, it can be said that the countries in the Asia-Pacific region could develop in opposite directions in the coming months,” says Stefan Breintner, fund manager of the investment boutique Gamax. “Some seem to have weathered the worst and are about to return to normal. In many regions, however, the extent of the pandemic and the long-term consequences cannot yet be assessed at all. "

South Korea and Taiwan as model students

Countries that have done best so far include South Korea and Taiwan. The virus arrived early in both countries and the governments acted quickly and prudently. South Korea has reduced the number of new infections to almost zero with mass tests and the breaking of infection chains. Taiwan, on the other hand, ensured that Sars-CoV-2 did not spread massively in the island state despite its geographical proximity to China, with early fever checks, entry bans, distance requirements and mandatory masking in public transport.

Successful disease control has meant that economic life in South Korea and Taiwan is not as restricted as it is in many European countries. As a result, the stock markets there did not plummet as deeply and, moreover, have recently recovered more strongly than major European stock exchanges. For comparison: The South Korean leading index Kospi has fallen by almost 14 percent over a period of three months. Looking ahead to one month, it rose 7.5 percent. The MSCI Taiwan lost almost ten percent of its value over a three-month period and gained 8.4 percent in the past four weeks. The Dax, on the other hand, recorded a more severe slump with more than 22 percent minus over a three-month perspective - and with plus 3.2 percent over one month, a smaller and also significantly more volatile recovery.

In China, too, things are looking up, albeit with obstacles. After a lockdown that democratic states could never have enacted with such severity, the pandemic in the economy seems to be under control. The economy is picking up again; in terms of exports, China even surprised positively in April with an increase of 3.5 percent over the previous year. However, things are looking bad for imports and in the service sector. All in all, China will need a lot of time to find its way back to a kind of economic normality, says economist Sonja Beer from the Institute of German Economy (IW) in Cologne in a recent study.

India is one of the countries that have the worst ahead of them. "According to Indian virologists, the country is still in the early stages of the pandemic," says Gamax fund manager Breintner. Because of its population density and poor health system, India is also at risk of the virus spreading particularly widely there. The investment expert is also concerned about other emerging markets in the region, such as Cambodia and Indonesia. “On the one hand, tourism is collapsing in these countries. On the other hand, it is not yet foreseeable whether international corporations will rethink their branched supply chains in the aftermath of the crisis and regionalize part of their production again, ”he says.

For Japan, too, the outlook is rather bleak. Prime Minister Shinzo Abe is admittedly very restrictive and has extended the state of emergency in the country until the end of May. However, the government is accused of reacting too slowly and not testing enough at the beginning of the pandemic. In addition, the Tokyo metropolitan area is still badly affected, despite the overall decline in infection rates. According to economists, the fact that Japan also had to postpone the Summer Olympics after some back and forth from this year to the coming year should not have any major consequences for the Japanese economy. But it is definitely a sad signal. It is hardly surprising that the Japanese Nikkei share index fell by more than 17 percent over a three-month period and has so far barely recovered from this fall.

Singapore plays a special role in the Asia-Pacific region. At the beginning of the pandemic, the city-state shone with extremely low infection rates, the virus appeared to be under control. However, since mid-April the numbers have exploded. Corona infections among foreign workers who live crammed together in narrow residential areas have triggered a second wave. This case, too, can serve as a lesson for the West. If Germany and the other European countries fail to prevent a massive second virus wave, the recovery on the stock exchanges should be over for the time being