5 Ways COVID-19 Is Affecting Malaysians
The world has been looking pretty dystopian lately – news headlines declare that there’s a new virus that’s a “very grave threat” to the world, millions have been quarantined, streets are deserted and supplies have been flying off supermarket shelves.
The coronavirus (COVID-19) outbreak is certainly a serious health emergency in China. But how worried should we be about the virus in Malaysia? Here are five ways COVID-19 is impacting Malaysians:
1. Threat to public health
The coronavirus recently reached a new grim milestone, claiming over 1,400 lives. It has spread faster and killed more people than SARS, a previous epidemic.
The World Health Organization (WHO) director warned last Sunday that the recent cases of coronavirus patients who have never been to China may just be the “tip of the iceberg”. And scientists worry that the virus could mutate into something even worse.
But Malaysians need not panic just yet.
While the virus has reached our shores (with 19 known cases at the time of writing), its estimated fatality rate is slightly over 2%. As most of the cases are concentrated in China’s Hubei province, and does not include mild cases, the real fatality rate might be lower. An infectious disease expert estimates that it will ultimately be less than 1%. This is low compared to other major viruses:
Source: Business Insider
By contrast, seasonal influenza has a fatality rate of less than 0.1% but infects as many as a billion people every year. A recent study estimates an average of 389,000 deaths every year due to respiratory deaths associated with seasonal influenza.
Malaysia has also been adept at handling the COVID-19 outbreak. WHO has commended the government for the way they’ve managed and contained the spread, saying that the health authorities here have been transparent and well-prepared.
We’ve also dealt with deadly outbreaks in the past – these include SARS, H1N1 and the Nipah virus – this experience could help us be more prepared to face COVID-19. In fact, Malaysia ranks at No. 18 globally on the Global Health Security (GHS) index, which measures how well a country is prepared to handle a major epidemic or pandemic (for comparison, Singapore ranks at No. 24).
But this doesn’t mean you should let your guard down – you should still take precautions to avoid contracting and spreading the virus.
2. Slower economic growth
In China, factories are silent, shopping malls are deserted and international retailers like Apple and Starbucks have closed operations. As the largest cog in the global trade machine, any disruption in China’s economy will affect other countries.
So how hard will the Malaysian economy be hit? The short answer is that we’re not sure yet.
Local businesses – especially those in the retail, tourism and distribution trade – are definitely feeling the pinch, thanks to disrupted supply chains and fewer Chinese tourists into Malaysia.
But experts from MIDF Research and RHB Research think that COVID-19’s impact on the Malaysian economy will be limited, with the brunt of the fallout to be seen in the first half of the year. They based this on data from the previous experience with SARS, which RHB Research points out had very limited impact on Malaysia’s GDP growth.
However, the world has changed since the SARS outbreak in 2003. China’s contribution to global GDP was just 4% then, compared to 16% now.
Other experts are more cautious. The Deputy International Trade and Industry Minister said that it is too early to estimate the impact of the virus on Malaysia’s trade, while Bank Negara Malaysia (BNM) governor Datuk Nor Shamsiah Mohd Yunus said that its impact is “too hard to predict”. She said that it will depend on how the virus spreads, and how countries respond to the outbreak.
Meanwhile, Fitch Solutions has revised Malaysia’s 2020 GDP (gross domestic product) down to 3.7% (from 4.5%).
3. Tourism sector takes a hit
Tourists – both local and international – have been less keen to travel since the outbreak. After all, who likes the idea of jostling with the sweaty, possibly contagious masses in public spaces when there’s a global epidemic brewing?
Plus, there’s the travel ban. The Malaysian government has imposed a travel restriction on those coming in from certain China’s Hubei, Zhejiang and Jiangsu provinces. Sabah and Sarawak have taken it a step further, placing travel restrictions on all China nationals.
This has taken a toll on the tourism sector. Malaysian hotels reported 95,972 room cancellations as of February 8 due to the virus, resulting in a revenue loss of over RM40 million. These cancellations are mostly from Chinese tourists, but also include local Malaysians and other nationalities.
The hospitality and retail businesses are expected to be affected too, as fewer tourists spend their money in these sectors. In particular, the luxury goods market might be affected as fewer rich Chinese shoppers – who make up 35% of global luxury spending – visit Malaysia.
For consumers, there’s one silver lining in the bleak corona-cloud: you can get luxury hotel rooms at up to 70% discount as hoteliers attempt to woo domestic travellers.
4. Stock market dips and gains
Our local stock market has seen more daily losses than gains over the past two months amidst trade war fears, tensions in the Middle East and concerns over the new coronavirus. The FBM KLCI has fallen 3.63% down since the start of the year, recently reaching its lowest point in 38 months.
Tourism-related stocks have borne the brunt of the losses. AirAsia Group Bhd’s stock price plummeted 15.88% since the start of January (in part due to allegations of bribery), while Malaysia Airport Holdings Bhd fell 11.32% in the same period.
On the other hand, healthcare stocks – especially glove manufacturers – have been on the rise. Since the start of the year, Top Glove Corp Bhd has surged 24.47%, Kossan Rubber Industries Bhd soared 17.79% and Hartalega rose 8.03%. Healthcare and glove stocks are expected to continue outperforming, at least in the short term.
While the FBM KLCI’s overall outlook looks bleak at the moment, this could be an opportunity for long-term value investors to pick up stocks that are currently undervalued.
5. Affected businesses to get government assistance
The government is planning to announce a stimulus package to help mitigate the economic impact of the coronavirus.
Economic Affairs Minister Datuk Seri Mohamed Azmin Ali highlighted that tourism, transportation and manufacturing as among the sectors which have been directly affected by Covid-19.
It’s expected to be unveiled by the end of February 2020.
Meanwhile, individuals affected by the slowdown can take advantage of the temporary deferment of loan repayments that Malaysian conventional and Islamic banks are stepping up to offer their customers. Some banks are also offering restructuring and rescheduling of financing for those affected by COVID-19.
Still too early to see full impact
The head of WHO’s health emergencies programme, Michael Ryan, said that it’s still too early to predict the end of COVID-19. “This outbreak could go in any direction,” added WHO chief Tedros Adhanom Ghebreyesus.
At this point, it’s still too early to determine its full health and economic impact. We’re still waiting to see how the outbreak will unfold and whether the virus will mutate into something more dangerous.
In the meantime, you don’t have to be too worried, as the situation seems to be under control in Malaysia. Just remember to take necessary precautions – wash your hands, don’t touch your face and avoid unnecessary travel to affected areas. And if you get sick, please see a doctor.