SHANGHAI, Jan 23 ― Chinese stock markets stumbled lower today after authorities took the extraordinary step of locking down the central metropolis of Wuhan in a bid to contain a deadly viral outbreak.
More than 90 per cent of shares on China's two exchanges fell at some point in the session, according to Bloomberg equities data.
A late bounce pared some losses in the final session before the weeklong Lunar New Year market holiday, with the benchmark Shanghai Composite Index losing 2.75 percent, or 84.23 points, to close at 2,976.53.
The Shenzhen Composite Index, which tracks stocks on China's second exchange, tumbled 3.45 per cent, or 62.79 points, to end the day at 1,756.82.
The pandemic has caused alarm over its potential to batter a Chinese economy already grappling with a long-term slowdown and trade tensions with the United States.
Investors became “emotional”, with many frantically clearing positions due to the fast-developing viral outbreak, Wanlong Securities said in a daily market commentary.
But it said the holiday's timing could limit the impact.
“The stock market will not be able to respond to the epidemic's development, which would cause even greater social panic,” it said.
“We cannot rule out that large funds will act to maintain stability,” the commentary added, referring to China's frequent use of state-controlled investment funds to stabilise turbulent markets.
More than 570 people have been infected with the coronavirus across China, which has also spread to several countries in the region and the United States.
Li Shiyu, managing director at Guangdong Xiaoyu Investment Management, told Bloomberg News that a turnaround in sentiment would depend on the number of new cases in coming weeks.
“The epidemic may reach a peak in two weeks and hopefully start to slow. If there is a trend for new cases to decline, I would consider buying shares again,” he said.
Travel shares led losses due to expectations that fear and government restrictions on movement could hit earnings during China's busiest travel period.
China Southern Airlines fell 3.59 per cent to 6.44 yuan and China Eastern Airlines lost 3.03 per cent to close at 5.12 yuan.
China International Travel Service shed 3.04 per cent to 82.01 yuan, and BTG Hotels Group tumbled 4.23 per cent to 17.21.
Kweichow Moutai, the world's largest distiller and producer of a fiery liquor often bought as a Lunar New Year gift, ended down 2.11 per cent at 1,052.80 yuan.
Markets had been forecast to climb higher after the recent signing of an initial trade agreement between the US and China. ― AFP
