The Hong Kong stock index slumped three per cent overnight in its first day of trading since the coronavirus outbreak intensified over the Chinese Lunar New Year.
Coronavirus has now claimed 132 lives while the number of cases has hit 5,974. The jump in deaths has triggered an international response, with British Airways the latest airline to suspend flights to Beijing and Shanghai.
The Hang Seng stock index fell three per cent overnight to hit a seven-week low. Japan’s Nikkei outperformed Hong Kong stocks, however, rising 0.7 per cent, while Singapore’s STI rose 0.1 per cent. Shanghai’s index will reopen on Monday.
“While the coronavirus continues to spread both in and outside China the market is trying to adjust positions,” said Ole Hansen of Saxo Bank.
“Stocks, especially those in emerging markets have sold off while secure government bonds, led by US treasuries, and safe-haven currencies such as the Japanese yen have both received a bid,” he added.
European stocks have tentatively risen this morning, lifted by banks as investors take stock of the spread of coronavirus.
Britain’s FTSE 100 was 0.1 per cent higher by 10am, Germany’s Dax was also up 0.1 per cent, and France’s CAC 40 had climbed 0.3 per cent.
Jim Reid of Deutsche Bank said: “Markets have continued to be mostly occupied by the impact of the coronavirus but fears have slightly subsided and other stories, e.g. Apple earnings, are taking more airtime again.”
Apple yesterday defied expectations with an all-time high profit take in the final quarter of the year, boosting sentiment around the world.
Reid said European markets have also been calmed somewhat by tough talk from China on tackling the virus and comments from a Chinese respiratory expert that the peak of the outbreak would be here in a week to 10 days.
Yet the coronavirus outbreak hurt Hong Kong stocks related to travel and tourism overnight. Macau casino operators Galaxy Entertainment and Melco International Development each fell more than five per cent, while Airline Cathay Pacific dropped three per cent.
Sean Darby of Jefferies said there are some similarities to the Sars virus outbreak of the start of the century. However, he said: “The Chinese economy is around eight-fold larger than in 2002-03 hence the impact on travel, logistics and supply chains will be much greater.”