Indian stocks plummeted on Friday, joining their global peers in a dramatic sell-off, as a new variant of the novel coronavirus that’s potentially vaccine-resistant was detected in South Africa.
The 30-share benchmark Sensex of the BSE tumbled nearly 1,700 points, or 2.9%, to settle at 57,107.15, after South African authorities announced they had detected a new variant of the novel coronavirus with a “very unusual constellation” of mutations. The fast-spreading variant threatens to derail economic recovery, and has prompted authorities to institute fresh curbs to stave off the scourge.
The heavily-mutated variant has come as a rude jolt just when we thought the virus was fizzling out and losing its potency, and has serious implications for people, businesses and the wider economy. Here’s the lowdown.
What is this new variant and how dangerous is it?
The new variant - B.1.1.529 - has, as Tulio de Oliveira from the Network for Genomic Surveillance in South Africa said, a “very unusual constellation” of mutations, which could help it escape the immune response and render it more transmissible. The very high number of mutations - the variant has reportedly 32 mutations in the spike protein - the part of the virus that most vaccines use to prepare the immune system against the infection. Mutations in the spike protein can hamper the pathogen’s ability to infect cells and spread, but also make it harder for the immune system to attack the virus.
How are countries responding to the new threat?
Countries have reimposed fresh border controls to keep the South African variant, which has also been found in Hong Kong and Botswana, at bay. Britain banned flights from South Africa and its neighbours, while Singapore said it would restrict arrivals from that country. Europe, which is battling a deadly fourth wave of infections, has also tightened curbs ahead of the festive season as travels and indoor gatherings in the run-up to Christmas are the perfect conditions for the virus to spread. The emergence of the new, highly contagious variant coincides with India’s decision to lift international travel restrictions from year-end, and has serious implications for public health and business resumptions.
How does the South African variant impact people and work?
The coronavirus, which first surfaced about two years ago, has upended lives and livelihoods. So far, the virus has infected more than 260 million worldwide and killed in excess of 5.2 million people. Thousands of businesses shut down as the covid-induced lockdown smashed demand for goods and services, disrupted supply chains, and left millions without jobs. The new variant comes just when we thought we were racing towards the endgame of COVID-19 pandemic, helped by a rapid pace of inoculation and as a result of natural infection in a large proportion of the population. Businesses across the globe were tentatively reopening, and many had begun mandating a return to physical offices. If the South African variant evades immunity and spreads fast, as the deadly Delta variant did this Spring, a return to normalcy could become difficult to predict. Fresh curbs could mean another shock to businesses and the broader economy, and job losses can’t be ruled out as a result.
Which sectors are most at threat if the new variant goes viral?
Contact-intensive businesses such as travel, tourism and hospitality are most vulnerable to the new strain of the virus if that becomes dominant, and sweeps the globe, prompting fresh restrictions. These fears were mirrored by how aviation and hotel shares reacted on Friday. Shares of InterGlobe Aviation Ltd, which operates India’s largest airline IndiGo, slumped about 9%, while those of SpiceJet, a budget carrier, tanked 7%. Shares of Tata Group company Indian Hotels settled 11% lower. These sectors felt the impact of last year’s lockdown immediately, and were only recovering slowly with vaccine rollout. The new variant, if left unchecked, could pose existential threats to many of the already-battered companies and render thousands of people jobless.