Hong Kong has offered almost $10bn in cash handouts to residents to counter the economic fallout of the coronavirus as global concern over the disease dragged Asian markets lower on Wednesday after a renewed sell-off on Wall Street.In his budget on Wednesday, Paul Chan, Hong Kong finance minister, said his government would award HK$10,000 ($1,280) to permanent residents of the territory whose finances had been hit by the spread of the virus and by last year’s prolonged street protests. China, where the virus began, has already offered cash and free transport to workers in an effort to restart its economy.“The social incidents in the past months and the novel coronavirus epidemic have dealt a heavy blow to Hong Kong’s economy,” Mr Chan said, referring to anti-government protests. He now expected Hong Kong’s economy to contract by up to 1.5 per cent in 2020.The finance minister also forecast a budget deficit of $139.1bn for 2020-2021, accounting for 4.8 per cent of gross domestic product, which would be the largest deficit on record.The latest stimulus from the Asian financial hub comes as Moody’s Analytics said the virus could push the global economy into recession and the US Centers for Disease Control and Prevention warned of a possible pandemic. Most Asia-Pacific stock market benchmarks fell into the red for 2020 on Wednesday following a second day of sharp falls for global stocks, with the S&P 500 shedding 3 per cent after the CDC warning.Moody’s Analytics said the chances of a pandemic had doubled to 40 per cent. “The coronavirus has been a body blow to the Chinese economy, which now threatens to take out the entire global economy,” said Mark Zandi, chief economist at Moody’s Analytics.Governments around the world increased preparations to contain the virus that has spread to 40 countries. A swath of Italy, the worst affected European country with more than 300 confirmed infections, has been sealed off while there are fears about the spread of the virus in Iran, where the number of cases has risen to 95, with the country’s deputy health minister also infected.
Following a sharp rise in cases in South Korea, the US confirmed that one of its soldiers in the country has tested positive for coronavirus. The announcement came a day after the US and South Korea said they were considering scaling back joint military exercises on the Korean peninsula owing to concerns about the spread of the virus.On Wednesday, Tokyo’s Topix fell 0.8 per cent, taking it almost 7 per cent lower in 2020, while in Seoul a fall of 1.3 per cent for the Kospi index left it down more than 5 per cent in the year to date.China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks dropped as much as 1.2 per cent, briefly erasing its gains for the year before reversing its losses to end the morning session little changed.In Hong Kong, the Hang Seng index dropped 0.7 per cent. Sydney’s S&P/ASX 200 index tumbled 2.3 per cent, leaving it up just 0.4 per cent for the year and one of the only big stock benchmarks in the region not yet in the red this year.The global death toll from the virus has now topped 2,700 from more than 80,000 confirmed cases.Read more about the coronavirus impactSubscribers can use myFT to follow the latest ‘coronavirus’ coverage