- Sectors such as travel and tourism, consumer discretionary and manufacturing that's closely linked to Chinese production were the "obvious losers" in the coronavirus epidemic, BNP Paribas analysts wrote in a Friday report.
- But as more consumers choose to stay home, online retail players will stand to benefit, the analysts said.
- In addition, some Asian economies are less exposed to the potential economic fallout in China — which make them a safe market to invest in now, they said.
- BNP Paribas identified the Asian sectors and stocks that are "safe" to invest in now, and after concerns about the virus ease.
The global spread of the new coronavirus has shown little signs of abating, with several analysts warning that the hit to economies worldwide could be more severe than what's currently expected.
"We believe it is too early to call an end to the market turmoil arising from the COVID-19 outbreak," analysts from BNP Paribas, France's largest bank, wrote in a Friday report. The new coronavirus, believed to have first emerged from the Chinese city of Wuhan in Hubei province, was recently named COVID-19 by the World Health Organization.
The bank said that while "the true extent of the stress on the Chinese economy is just beginning to emerge," the degree to which China is economically linked with the rest of Asia means that "all the Asian markets could suffer — some more, some less."
Sectors such as travel and tourism, consumer discretionary and manufacturing that's dependent on production input from China were the "obvious losers" of the coronavirus epidemic, the analysts said in the report.
But that doesn't mean investors should avoid buying Asian stocks now.
As more consumers choose to stay home, online retail players stand to benefit, said BNP Paribas.
In addition, some Asian economies are less exposed to the potential economic fallout in China — that makes them a safe market to invest in now, the analysts said, adding that "India is the first one that comes to mind."
Here are the sectors and stocks that BNP Paribas identified as safe to invest in now:
When concerns surrounding COVID-19 ease, some sectors most impacted by the outbreak could bounce back sharply, according to the bank.
"We expect the Chinese consumption to recover rapidly. Tourism might not, as changes in consumer behaviour, especially where such behaviour could potentially expose one to infection, could be much more long drawn out," the analysts said.
They added that as manufacturers in China resume operations, concerns about output disruptions would "rapidly diminish." That's good news for economies and regional companies that are closely tied to China's production, they said.
These are the sectors and stocks that BNP Paribas said could bounce back:
- Chinese consumer discretionary: Jiangsu Yanghe Brewery, Anta Sports, Brilliance China, Midea Group, Sands China, MGM China
- Chinese energy: CNOOC
- Korean tech: Samsung Electronics, SK Hynix
- Taiwan tech: TSMC, Hon Hai, Largan Precision
The BNP report was released on Friday, before South Korea raised the alert on the disease to its highest level on the weekend. The number of cases on Friday morning was 204 — it tripled to 763 on Monday morning.