Coronavirus crash
£275bn wiped off stocks as bug kills more in China than Sars did
CHINA’S stock market yesterday suffered its worst day since 2015 as traders finally returned to work amid heightened fears over the deadly coronavirus.
As the Shanghai and Shenzhen Stock Exchanges reopened for the first time since January 23, following an extended lunar new year holiday, £275billion was wiped off the value of stocks listed in China.
It came as Health Secretary Matt Hancock warned: ‘It’s clear the virus will be with us for at least some months to come. This is a marathon not a sprint.’
It also emerged that the total number of deaths from the new form of coronavirus in China is now higher than the death toll in mainland China from the 2002 Sars outbreak.
China’s CSI 300 index, which tracks the performance of the country’s biggest listed companies, slid 7.9 per cent yesterday as investors desperately sold their shares. They fear the outbreak will be a huge drag on the economy.
The slide came even though China’s central bank attempted to help cushion the blow by pumping £131billion into the financial system by buying back bonds.
Chinese officials had planned for growth of around 6 per cent in 2020, but are now mulling over a cut to the country’s annual economic growth target, as citizens continue to stay at home where possible, sources told the Bloomberg news agency. Other Asian markets, which were open last week and so had already taken a blow, managed to dodge the worst of yesterday’s shockwaves from China.
Hong Kong’s Hang Seng index, which slid 5.9 per cent last week, was up 0.2 per cent after it closed most of its border crossings with mainland China. Japan’s Nikkei was down another 1 per cent, after a 2.6 per cent fall last week.
European markets largely avoided the contagion, as the UK’s FTSE 100, Germany’s DAX and France’s CAC all ended the day higher. But there are fears that the shutting down of commerce in large parts of China threatens not just the ouput of the world’s second-largest economy, but the global economy as a whole because of the interwoven nature of international trade.
Hong Kong’s economy shrank last year for the first time since 2009 as the Chinese territory struggles with the impact of the coronavirus outbreak. Its economy contracted by 1.2 per cent compared with 2018, according to government data.
Meanwhile, the total number of deaths from novel coronavirus in China has reached 361. The death toll in mainland China from the 2002 Sars outbreak was 349. But in total Sars killed 774 as it spread to other countries, including 299 in Hong Kong.
Yesterday, Mr Hancock told the Commons that the number of cases was ‘doubling around every five days’.
He said that to date there had been 17,000 cases in mainland China, 185 in other countries and 362 fatalities – one person has died in the Philippines.
But in a reassuring development, a source close Mr Hancock said genetic tests had been carried out on the UK’s first two cases, and the results suggested the virus was not mutating. If it was mutating, it could spread much more quickly and be even more difficult to treat.
Two people, a University of York student and one of the student’s relatives, continue to be treated for coronavirus in the specialist infectious diseases unit at Newcastle Royal Victoria Infirmary.
BRITISH savers exposed to China’s stock market are set for a rocky ride as the spread of the deadly coronavirus rattles financial markets around the world.
On the first day of trading in shanghai and shenzhen after the extended public holiday over the lunar new year, £275bn was wiped off the value of China’s listed companies.
The CSI 300 index, which tracks the performance of China’s biggest listed companies, ended the day down 7.9pc in its worst session since 2015.
hundreds of companies fell by 10pc, hitting the limit the Chinese authorities allow before trading is suspended.
stocks were routed despite China’s central bank pumping £131bn into the financial system in an attempt to cushion the blow.
The lunar new year holiday was originally scheduled to end last Friday but was extended by three days to give authorities more time to deal with the crisis. analysts warned of further volatility in the coming days and weeks, depending on how the crisis develops. That means British savers with money exposed to China face a rollercoaster ride.
Li-Gang Liu, chief China economist at Citi, said: ‘It is unlikely the economy will experience a quick rebound once the outbreak is under control.’
russ Mould, investment director at aJ Bell, added: ‘The longer it takes to contain the virus, the more harm is likely to be done to China’s economy, the world’s second-biggest, and tradeflows in and out of the country.’
Millions of Britons indirectly own shares in Chinese companies through asia-focused funds held in their pensions, Isas or investment accounts. For several years they have been hoping to benefit from the superior growth prospects offered by China’s expanding middle class, continued investment in infrastructure and growing focus on cutting-edge technology.
But these savers are braced for further volatility as Chinese officials consider cutting the country’s 2020 economic growth forecast from its current level of around 6pc.
ping an Insurance group, one of the largest companies listed in China, saw its shares tumble by 6.9pc. UK funds such as aberdeen New Dawn Investment Trust and the Baillie Gifford China Fund hold large stakes in the firm.
and shares in the enormous Industrial and Commercial Bank
Of China, which is owned by funds such as the Fidelity China Focus Fund and the Templeton China Fund, slid 5.3pc.
Investors fear the coronavirus outbreak, which has led to emergency quarantines being imposed in the city of Wuhan and neighbouring towns, will weigh on China’s economic growth. Us chains in China, including apple, McDonald’s and starbucks, have even temporarily shut stores. Major airlines have cancelled all flights to the country.
analysts at Jp Morgan have axed their expectations for China’s economic growth in the first quarter of this year from 6.3pc to 4.9pc.
experts are now worried that the fallout from coronavirus could send ripples across the wider global economy.
Goldman sachs’ chief economist Jan hatzius said: ‘The nearterm impact is quite large.
‘What happens to 2020 as a whole really depends on how quickly the episode is brought under control.’