Chinese stocks have plunged in the first day’s trading since the Lunar New Year holiday, suffering their worst opening since the financial crisis in 2007 amid growing fears about the effects of coronavirus on the economy.
China’s CSI 300 index of Shanghai and Shenzhen-listed stocks had fallen 7.9 per cent by 7.15am UK time, having recovered slightly after plummeting more than nine per cent at the open. In Shanghai, $370bn (£280bn) was wiped off the index.
It came despite Beijing pumping £16bn into its economy and cutting a key-short term interest rate in a bid to boost liquidity and stabilise markets.
Coronavirus had killed 361 as of Sunday, with the number of infections standing at around 17,205. When Chinese markets last traded on 23 January, the death toll was 17 and the infection number 600.
Over the weekend the Philippines reported the first coronavirus death outside of China. Cases have been confirmed globally, including in the US and UK.
“China’s authorities have demonstrated their determination to deal with the economic implications of the coronavirus by cutting the key reverse repo rates by 10 basis points [0.1 percentage points],” said Ian Williams, economics analyst at broker Peel Hunt.
“The move may help sentiment but there is still no urgency to rebuild risk exposure as the virus continues to spread.”
China’s currency unit, the yuan, opened at its weakest level this year and slid one per cent. This took it below the key seven-per-dollar level that has in the past angered the US
Oil, iron ore and copper all fell sharply on the Shanghai market, indicating the effect the virus is having on the real economy.
Yet Mark Haefele, chief investment officer at UBS Global Wealth Management, said he thought the sell-off in China “represents more of a catch-up” than new fears over the virus.
“If anything, we think the magnitude of the sell-off appears less severe than market bear cases ahead of the open,” he said.