SINGAPORE/HONG KONG: With the world reeling from one of the biggest risk sell-offs since the 2008 global financial crisis, more Covid-19 (coronavirus)-fueled declines in emerging markets may only be tempered by the prospect of coordinated central bank action or large fiscal stimulus.
More than $1.1 trillion was wiped off the value of developing-nation stocks and bonds last week as the economic impact of the coronavirus worsened. Currencies and equities rounded off February with back-to-back monthly declines, while bond spreads widened by the most since August.
"Given the tightening of financial conditions due to the stock-market meltdown, the US Federal Reserve will deliver to weaken the dollar. If none of this works, just pray.” As the virus continued its spread last week, with Latin America and Africa confirming their first cases, expectations grew that the World Health Organisation would declare a pandemic. More airlines cut flights to affected regions, while governments increased travel restrictions, shut schools and banned sporting and entertainment events.The economy was probably only operating at 60-70% of normal capacity at the end of last month, according to Bloomberg Economics estimates.
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