Chinese stocks fall as virus fears spread through markets

Monitoring Desk

SHANGHAI: Chinese stocks tumbled Monday as investors sold out on fears about the global spread of the coronavirus and its potential impact on the world economy, analysts said.

The benchmark Shanghai Composite Index closed down 3.40 percent, or 98.18 points, at 2,789.25, while the Shenzhen Composite Index on China’s second exchange fell 4.83 percent, or 86.96 points, to 1,712.02.

Hong Kong’s Hang Seng Index was down 4.60 percent in afternoon trade

The losses were in line with another plunge across Asia as emergency policy easing measures by central banks including the Federal Reserve, Bank of Japan, and Reserve Bank of Australia failed to ease investors worries.

The losses in China came despite a People’s Bank of China cut in the reserve requirement ratio for some commercial lenders, which the central bank said was expected to have released liquidity of around 550 billion yuan ($78.5 billion) into the market.

The measure may have been timed to blunt the impact of Chinese economic data also released on Monday that showed industrial production had contracted for the first time in three decades because of the outbreak.

Industrial production for January and February shrank 13.5 percent on-year, missing forecasts of three percent drop.

Retail sales plummeted 20.5 percent — also its worst showing in decades — after rising eight percent in 2019. Analysts had expected a four percent fall.

“Although the Chinese government rolled out stimulus measures to support the virus-hit economy, the Chinese market remained weak today,” Wanlong Securities said in a daily market commentary.

“As the coronavirus spreads globally, demand for consumer goods is falling and will not easily rebound soon.”

Shanghai-listed CITIC Securities slumped 5.30 percent to 22.67 yuan and Shenzhen-listed telecoms giant ZTE dropped the maximum 10 percent to 45.71 yuan. (AFP/APP)