More than 2,600 stocks fell by the 10 per cent daily limit

Chinese stocks collapsed on Monday with hundreds of firms plunging by the maximum 10 per cent as investors got their first chance in more than a week to react to a barrage of bad news from the spiralling coronavirus outbreak.

The benchmark Shanghai Composite Index ended the morning session down 8.13 per cent, or 241.87 points, at 2,734.66, while the Shenzhen Composite Index, which tracks stocks on China’s second exchange, was down 8.30 per cent, or 145.78 points, to 1,611.04. Hong Kong went into the break 0.09 per cent, or 23.78 points, up at 26,336.41 on bargain-buying after being battered last week.

The scale of the plunge was remarkable even by the standards of China’s notoriously volatile share markets, indicating deep concern over the economic impact of the epidemic, which has now killed more than people SARS in 2003.

The last time Chinese indices had plunged in excess of eight per cent in a day was when an equities bubble popped nearly five years ago. “Investor panic quickly spread across the board and will be dominating the market over the short term,” said Yang Delong, chief economist at First Seafront Fund.

More than 2,600 stocks fell by the 10 per cent daily limit, according to Bloomberg financial data. The yuan also weakened more than 1.5 per cent to around 7.02 per dollar.

Markets in the world’s second-biggest economy had closed on January 24 for the week-long Lunar New Year holiday, but in that time the viral epidemic that started in Wuhan has spread globally. They were scheduled to reopen on Friday but the government extended the holiday to help deal with the virus.

Stock markets worldwide have sunk as major corporate names froze or scaled back their Chinese operations, threatening global supply chains that depend heavily on the country.

Also read: Asian shares drop, commodities sink on virus fears after Lunar New Year break

China’s central bank said it would pump 1.2 trillion yuan ($173 billion) into the economy on Monday to help stabilise markets. Yang said an interest rate cut also is “urgent and necessary”.

Volatility will reign until there are clear signs that the coronavirus is contained, analysts said. Travel and tourism shares plummeted after domestic and international travel curbs were imposed to slow the virus. China International Travel Service fell 10 per cent to 73.80 yuan shortly after the open.

Individual Chinese stocks can only move 10 per cent in either direction each session before being suspended, a measure intended to limit volatility. Foxconn Industrial Internet, an arm of Taiwanese tech giant Foxconn, were also limit down at 18.00 yuan. Foxconn has closed its Chinese factories until at least mid-February, potentially affecting supply chains for tech companies that rely on it for everything from Apple’s iPhones to flat-screen TVs and laptops.

China Southern Airlines and China Eastern Airlines were also suspended after diving 10 per cent. Consumer bellwether Kweichow Moutai, the world’s largest distiller and whose fiery liquor is a favoured Lunar New Year gift, fell 5.27 per cent to 997.30 yuan.

Many healthcare stocks gained, however, as Chinese rush to stock up on face masks and other medical supplies. Shares in Shanghai No. 1 Pharmacy and China Meheco both were suspended after surging 10 per cent.

The People’s Bank of China (PBoC) said its market intervention was aimed at maintaining banking system liquidity and a stable currency market. China’s economy is expected to take a clear hit from the crisis, which has brought industrial regions grinding to a halt.

“The near-term impact on Chinese GDP growth is likely to be large,” Oxford Economics said in a research note. “Considering the affected areas account for just over 50 percent of total Chinese output, we think this could lead China’s annual GDP growth to slow to just four percent in Q1,” it added -- down from a previous forecast of six percent growth.

China’s benchmark iron ore contract declined by its daily limit of eight per cent on Monday, while copper, crude and palm oil also sank by the maximum allowed, according to Bloomberg News.
Published on February 03, 2020
stock exchanges
stock market
China
SHARE

0

COMMENTS
Railways identifies 6 more routes for high speed corridorsThe Hindu Businessline
Old vs. New Tax Regime? Here’s all you need to knowThe Hindu Businessline
Born After 1960? Get Term Insurance 1Cr with Return on Premium @ 1050/mon*. Enquire Now!Term Life Insurance|
Sponsored
Earn an MBA without leaving your job, Pay With Easy EMIupGrad|
Sponsored
Kerala CM takes firm stand, convinces Governor to read out State’s views on CAAThe Hindu Businessline
Tata Nano could have been a success, if only...The Hindu Businessline
This Anti-Snoring Device Hits All Sales Records In IndiaSleepQuiet|
Sponsored
Villas For Sale in Dubai Might Totally Surprise YouVillas for Sale in Dubai | Search Ads|
Sponsored
Get up to 8.40*% Interest Rate on Fixed Deposits.PNB Housing Finance|
Sponsored
A Proven Way to Sharpen Young MindsMagic Crate|
Sponsored
Recommended for you
Import duty on gold coins raised to 12.5%
ONGC, IOC, other oil PSUs to invest Rs 98,521 cr in FY21
Gold approaching lifetime high
15th Finance Commission recommends reduction in States’ share in divisible pool to 41% for FY21
Global equity markets slump on China virus economic concerns, gold gains
TRENDING
Railways identifies 6 more routes for high speed corridors
Old vs. New Tax Regime? Here’s all you need to know
Kerala CM takes firm stand, convinces Governor to read out State’s views on CAA
Tata Nano could have been a success, if only...
by Taboola
Promoted Links
You May Like
Born between 1960-1975? Rs.1cr Life Cover at Just Rs.100/Day*. Check Your Cover!Term Life Insurance
Earn an MBA without leaving your job, Pay With Easy EMIupGrad
This Anti-Snoring Device Hits All Sales Records In IndiaSleepQuiet
Villas For Sale in Dubai Might Totally Surprise YouVillas for Sale in Dubai | Search Ads
Get up to 8.40*% Interest Rate on Fixed Deposits.PNB Housing Finance
A Proven Way to Sharpen Young MindsMagic Crate
IndiGo, Air India ban comedian Kunal Kamra for accosting Arnab Goswami on IndiGo flight
I-T Dept withdraws appeal against Rajinikanth over penalty
7,000 tonnes of imported onions rot at JNPT as retail prices plummet
Ahead of strike, bank unions want PM to help expedite wage settlement

Specials
Portfolio
BL Ink
Catalyst
India File

Amazon’s Echo Auto review: Alexa goes for a ride

Find out if you’re a likely candidate for this in-car smart addition to the smart speakers line-up
‘Universal Health Coverage pays long-term dividends for nations’

With 10 years remaining to 2030, the World Health Organization (WHO) is calling on all countries to accelerate ...
Voluntary blood donation by 2020, still a gap to be bridged

It is a community responsibility to keep blood banks full all the time
IP Acts review: It is important to put people above profits

Earlier this month, the Department of Promotion of Industry and Internal Trade (DPIIT) convened a stakeholder ...
Big Story: What the Budget means for taxpayers and investors
Subscribe to The Hindu BusinessLine to read more.

Budget 2020 Special Offer!
Savings of over Rs. 2300. Limited Period Offer. Hurry!
Remind Me Later

Big Story: What the Budget means for taxpay............BL