2020.02.02; SuF2nd: Chinese Markets Tumble on Mounting Coronavirus Fears
Published by DB,
Chinese Markets Tumble on Mounting Coronavirus Fears
By Steven Russolillo
Chinese markets dropped sharply Monday morning, reopening after the extended Lunar New Year break, due to heightened anxiety over the fast-spreading coronavirus and its impact on the global economy.
The benchmark Shanghai Composite Index fell 8.1% in early action, on the first trading day of the Year of the Rat, putting the index on pace for its steepest one-day decline since August 2015. Retail, consumer services and transportation stocks led the declines. The Shenzhen Composite dropped 8.6%.
The drops reflected how China was catching up with the rest of the world's declines last week.
Other markets across Asia fell on Monday too, but they were more muted. Hong Kong's Hang Seng Index dropped 0.6%, piling onto last week's 5.9% decline--its worst weekly drop in two years. Indexes in South Korea and Japan fell roughly 1% each.
Monday's selloff came as mainland-listed Chinese stocks traded for the first time since Jan. 23, two days before the start of Lunar New Year holiday. The markets were originally scheduled to reopen on Jan. 31, but the break was extended to Monday because China extended its national holiday in an attempt to slow the spread of the new coronavirus.
The number of confirmed infections across China jumped sharply--from 830 cases on Jan. 23 to nearly 15,000 over the weekend--while the death toll climbed to 305 from 25 over that period.
"Until the rate of new cases peaks, equities are in limbo--too late to sell, too early to buy," said Sean Darby, global equity strategist at Jefferies.
Some exchange-traded funds that hold mainland-listed stocks fell 8% last week, foreshadowing the declines in Shanghai and Shenzhen.
Markets outside of China, including the U.S., have also been battered by the spreading virus and fears that it will damage global growth. On Friday, the S&P 500 suffered its worst day since August, wiping out early year-to-date gains.
S&P futures rose 0.5% in Sunday evening U.S. trading.
Write to Steven Russolillo at steven.russolillo@wsj.com
https://www.marketscreener.com/news/Chinese-Markets-Tumble-on-Mounting-Coronavirus-Fears--29929985/