KUALA LUMPUR: Asian stocks retreated yesterday on news that the swine flu had claimed more than 100 lives, reviving memories of a similar outbreak seven years ago.

Taiwan’s Taiex Index fell the most, skidding 2.99% to 5,705.05 while Hong Kong’s Hang Seng Index dropped 418.43 points or 2.74% to 14,840.42.

Shanghai’s Composite Index lost 43.25 points or 1.77% to 2,405.35 and Singapore’s Straits Times Index fell 1.85% or 34.25 points to 1,818.61.

However, Japan’s Nikkei 225 recouped early losses to close 18.35 points or 0.21% higher at 8,726.34.

Worries about the global spread of the virus saw European markets tracking the losses in the Asian bourses. All the key indices fell, with the DJ Euro Stoxx 50 down 1.75% to 2,279.21 in early trade. The Dow Jones Industrial Average was down 1.05% at 7,991.31 at yesterday’s opening while the S&P 500 slid 1.14% to 856.34.

At Bursa Malaysia, the Kuala Lumpur Composite Index (KLCI) declined 1.27% or 12.56 points to close at 980.12 points after a good run last week. Last Friday, the KLCI rose 2.9% week-on-week to a six-month high of 992.68.

Commodity prices also fell, with crude palm oil down RM104 to RM2,481 while light sweet crude oil slipped US$2.62 (RM9.43) to US$48.93.
Fears of a global swine flu pandemic grew on news of new infections in the US and Canada on Sunday. In Mexico, where the outbreak began, millions of Mexicans stayed

indoors to avoid the virus that has already killed 103 people.

Reuters cited Mexico’s health minister Jose Angel Cordova as saying about 400 people were still in hospitals around the country.

OSK Investment Research head of research Chris Eng described the reaction as overblown.

“Based on past experience with the severe acute respiratory syndrome (SARS) epidemic and bird flu, most governments will be swift in containment exercise. I believe investors are taking this opportunity as a good reason to exit the market after the good run,” he told The Edge Financial Daily.

However, he added that if the swine flu outbreak prolonged, aviation companies would feel the impact on their bottom lines.

Shares of budget carrier AirAsia Bhd fell 8.8% to close at RM1.14 from a six-month high of RM1.25 last Friday while Malaysian Airline System Bhd (MAS) declined 3.8% to RM3.02.
MAS director of operations Datuk Tajuden Abu Bakar told The Edge Financial Daily that the national carrier did not see any drop in travel demand amid the swine flu outbreak.

“Currently, no travel restrictions have been issued. At this stage, MAS has not seen a drop in travel demand and we are still operating as normal. We are in constant and close touch with officials from Malaysia Airports, Ministry of Health (MOH) and other airport operators to discuss handling procedures and how best to manage this issue,” he added.

In a move to increase health surveillance as a result of the swine flu outbreak, the MOH will be screening passengers arriving from Los Angeles and New York for any obvious symptoms of the virus. Quarantine action will be done if necessary, similar to the procedure adopted during the SARS scare in 2003.

Tajuden said MAS would assist in expediting the process as the exercise would cause some inconvenience, especially for passengers with connecting flights.

“We will do our best to minimise this although this exercise is expected to slow down the incoming flow of traffic before the immigration lane. Moving forward, we will continue to monitor the situation and make adjustments as necessary.”

Similarly, AirAsia group chief executive Datuk Seri Tony Fernandes said at a briefing yesterday that he was confident of handling the situation and did not expect the swine flu outbreak to slow down its operations.

Tourism-related counters Genting Bhd and Resorts World Bhd also saw a decline in their share prices. Genting fell 5.7% to close at RM4.60 while Resorts lost 5.9% to RM2.39.
The weak sentiment also affected other counters as investors locked in gains, with Proton Holdings Bhd falling 26 sen to RM2.80 and Public Bank Bhd-foreign and Bursa Malaysia Bhd clipping 20 sen each to RM8.45 and RM6.

In contrast, the swine flu outbreak proved to be a boon for glovemakers as there were expectations of higher demand for medical gloves if the swine flu spread.
The world’s largest rubber glovemaker Top Glove Corp Bhd rose 65 sen or 11.8% to a year-high of RM6.15 yesterday from RM5.50 last Friday.

Kossan Rubber Industries Bhd gained 30 sen or 8.98% to a six-month high of RM3.64 while Supermax Corp Bhd was up 7.38% to RM1.60. Adventa Bhd increased 22.3% or 19.5 sen to a six-month high of RM1.07 and Hartalega Holdings Bhd rose 5.3% to a year-high of RM3.18.