A fall in daily COVID-19 case counts in Korea should have a positive ripple effect across Asia, eventually.
Although markets are still heavily exposed to this week's oil price downdraft, the fall in the daily coronavirus case counts in Korea is sending a positive ripple across Korean assets – as both the won and KOSPI are bid today. Concerns around reporting accuracy in China leave Korea the best proxy case study for investors. Korea reported a smaller daily increase on Monday (96) vs. 248 reported on Sunday. Monday's gain was a two-week low. So far, 35 new cases have been reported for Tuesday.
The KRW could be one of the early winners and a key risk bellwether in Asia once daily new cases top out. When Korea sees off the coronavirus, markets will assume aggressive quarantining in countries with advanced medical care will follow suit. And risk lights should start flickering between amber and green again instead of a constant shade of red.
The elephant in the room for global risk to turn back on is still the U.S. testing numbers. Indeed, the day of reckoning is near, and the market mega talking point is the inevitable headline that U.S. virus headcount numbers will climb substantially higher from current levels, possibly in an explosive way, once testing is rolled out on a large scale. So it might be a bit early to fasten the seat just now.