HSBC names two nations which have handled Covid and can profit from it in 2021

SINGAPORE – Singapore and Vietnam successfully battled coronavirus in 2020 and are likely to maintain the situation for next year, an economist said this week.

“These two countries are probably the most positive,” said HSBC Global Research’s Joseph Incalcaterra when asked which Southeast Asian countries can keep Covid under control and smoothly introduce vaccines.

Singapore “has brought its previous outbreaks under control and … at a time when most countries in the world are actually tightening restrictions, Singapore is going the opposite way,” ASEAN’s chief economist told CNBC’s “Squawk Box Asia” on Tuesday.

The city-state entered the third phase of its reopening this week and now allows gatherings of eight out of five people. Tourist attractions can increase their operating capacity from 50% to 65% once they are approved by the authorities.

People swim on a beach in East Coast Park on December 25, 2020 in Singapore.

Suhaimi Abdullah | Getty Images News | Getty Images

Incalcaterra said Singapore also has an effective vaccination strategy.

“Thanks to a relatively small population, the prospects for Singapore for 2021 are extremely good by comparison,” he said.

Prime Minister Lee Hsien Loong said there will be enough vaccines for “everyone in Singapore” by the third quarter of 2021. The country was the first in Asia to receive a shipment of Pfizer BioNTech vaccines on December 21, 2020.

HSBC’s Incalcaterra also praised Vietnam’s handling of the virus, saying its response to the pandemic enabled the country to maintain its reputation as a “very good destination” for foreign direct investment. The country has been viewed as an alternative manufacturing hub for companies looking to move out of China.

“We have seen that FDI remains very resilient in Vietnam this year,” he said.

Overall, however, Southeast Asia is unlikely to benefit from a vaccine in the near future due to logistical difficulties in rural parts of the region. “It is very unlikely that a significant portion of the population will be vaccinated in 2021,” he said.

Deep damage

Separately, Incalcaterra said Southeast Asia had been “hit very hard” this year. “From a domestic perspective, the traditional consumer motor of these economies is no longer intact.”

“We really don’t have a good view of the short-term recovery considering how deep the damage is,” he added.

While electronic exports have been “relatively bright”, HSBC is focusing on how quickly consumption and investment in the region can recover.

He said countries had “very ambitious infrastructure programs” to make the region a “reliable base for manufacturing”. These projects have stalled because of the coronavirus.

“Until the virus is under control … we won’t see this investment engine regain traction,” he said. “I think this is the biggest short-term obstacle to growth in Southeast Asia.”

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