China’s markets have had their biggest single-day loss in many months amid growing fears surrounding the coronavirus outbreak.
China’s blue-chip index the CSI300 fell by 3.1%, marking its worst week since May last year, while the SSE Composite fell by 2.8% – its biggest fall since August.
Seventeen people have died and more than 600 people have been infected with the SARS-like virus, China’s government has said.
Image: Residents in Wuhan, where the outbreak is believed to have originated
The virus, which can cause pneumonia and other severe respiratory symptoms, has also spread to the US, Thailand, Japan and South Korea.
Airports around the world have brought in screening measures and parts of China are on lockdown, despite millions of Chinese preparing to travel domestically and abroad for their Lunar New Year celebrations.
Investors on Thursday dumped shares in travel-related companies, retreating to the relative safety of bonds.
China Eastern Airlines shed 3.4%, Hainan Airlines was down 2.9%, Air China lost 4.4% and China Southern Airlines was down 3.7%.
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Larry Hu, an economist at Macquarie Capital Ltd, said of the crisis: “We can’t answer how severe it will be and when it will end.
“The worst is yet to come.”
He did, however, say that the virus’s impact on the Chinese economy is expected to be “manageable and short-lived”.
Chinese companies that make healthcare products or protective clothing and equipment continued to benefit from concerns over the virus.
Shanghai Dragon Medical, which makes medical disposable and healthcare products, was up almost 7%, meaning it has gained 23% in the past five days.
Tianjin Teda, a conglomerate whose products include medicines, rose by almost 10%, an increase of almost 40% in the past five days.
The Chinese city of Wuhan is sealed off after the deadly virus outbreak
Also among those experiencing a surge in value were Shandong Lukang Pharmaceutical Co, Jiangsu Sihuan Bioengineering Co and Jiangsu Lianhua Pharmaceutical Co, all rising by their daily limit of 10%.
Jeffrey Halley, senior market analyst, Asia Pacific at OANDA, said in a client note: “News that China has effectively quarantined the entire city of Wuhan (where the virus is believed to have originated) has rattled markets.
“With hundreds of millions of people moving around China and Asia as a whole, returning home for Chinese New Year – perfect conditions for a viral spread.”
He added: “It is thus, quite understandable that some money would be taken off the table until the true extent of the coronavirus issue becomes obvious.
“No one ever went broke taking a profit. The word, therefore, is don’t panic.”
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Markets in China will be suspended on Friday for the week-long new year holiday.
Other Asian markets were also down; Japan’s Nikkei by 1%, South Korea’s Kospi by 0.9% and Hong Kong’s Hang Seng by 1.5%. Taiwan, Singapore and Australia also fell.
Around the world, the FTSE 100 gave up 0.2% in early trading, France’s CAC 40 lost 0.3% and Germany’s DAX slipped 0.7%. US markets were also down slightly.
Ned Rumpeltin, TD Securities’ European head of currency strategy, said: “Ultimately, the coronavirus is a slow-burning but important story for markets that is likely to last for months rather than just a few days.
“And the natural go-to currencies when there are headlines like these are the yen and the Swiss franc.”
Source : Sky News