Asian equities are sending a warning to the world: each time a lockdown is imposed, it sets up local stocks for another beating.

New Zealand said on Monday it will go into nationwide isolation within two days. As a result, its stocks had the worst day on record. India over the weekend moved to shut down its main government and finance centers. Its benchmark gauge was also whacked by the biggest loss ever. Australia said it will enforce more stringent controls and close pubs, restaurants and casinos; its main index closed at the lowest level since 2012.

“The execution of lockdowns is turning the fears or speculation into reality for investors,” said Sameer Kalra, founder of Target Investing in Mumbai. “And such measures are shocks for everyone.”

Concerns are rising over a sharp drop in business activity and a potential recession that follows the lockdowns. U.S. stock-index futures hit exchange-mandated halts for the ninth time in 10 days as traders assessed impact from shutdown of cities from New York to Los Angeles, and Senate Democrats’ vote to block a coronavirus economic rescue package. The FTSE 100 Index was down as much as 5.2% as investors factor in a full shutdown for the U.K. economy.

Singapore also planned to bar all short-term visitors and limit foreign workers from entering. Its Straits Times Index fell as much as 8.4%, poised for the biggest drop since 2008. Its neighbor Thailand imposed a partial shutdown Bangkok and metropolitan areas since Sunday and an 8% dive in its stocks just triggered a trading halt. Meanwhile Hong Kong will prohibit non-residents from visiting for 14 days and prevent bars from serving alcohol.

“Investors sell equities more indiscriminately and more broadly than in previous declines,” said Eli Lee, head of investment strategy at Bank of Singapore. “We think that the market contour of the Covid-19 crisis is more likely to be W-shaped or U-shaped, instead of a V-shaped recovery if we do not see” a sudden improvement in the virus trajectory soon.

Here are what market participants are saying about Monday’s sell-off:

Not Yet the Bottom
“The time to start buying into equity-market weakness has not yet arrived,” said Michael Hood, a global strategist for multi-asset solutions at JPMorgan Asset Management. “The evolution of a medical emergency that has forced the economy into a sudden stop, and a heterodox policy response which may or may not be sufficient to avoid mass layoffs and acute financial system stress.” provide “extreme uncertainty,” he added.

That’s because service industries are contracting at “unprecedented rates” due to the containment outbreak, which is different from past recessions when the economic hits were originated in cautious behavioral swings at companies, Hood said. “This dynamic sets up a substantial challenge for policy,” he added.

Risk Aversion
“Risk aversion appears here to stay as investors become more fearful that this could be the worst global recession during peacetime,” Edward Moya, senior market analyst at Oanda, wrote in an emailed comment.

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