HONG KONG, March 12 ― Shares in China and Hong Kong fell along with global markets today as a surprise US ban on travel from Europe added to investor fears over the impact of coronavirus, although losses were less steep in mainland China.
The Shanghai Composite Index fell 1.3 per cent and the blue-chip CSI300 index lost 1.7 per cent in the morning session after US President Donald Trump announced a temporary ban on travel to Europe, excluding the UK, to contain the virus.
Trump announced other steps to support US businesses and promote growth but some investors were unconvinced the global economy can quickly recover as worries grow that the number of infections could rapidly snowball globally.
“Markets are very nervous as this is a real black swan event, we are potentially looking at a global recession,” said Carlos Casanova, Asia Pacific economist at Coface.
Overnight, the World Health Organization declared the coronavirus a global pandemic. But in China, where the outbreak started, new cases in the epicentre Hubei province fell to single digits for the first time.
Losses in Chinese shares were limited compared with the broadest gauge of Asia ex-Japan equities, which fell more than 4 per cent.
Rob Mumford, investment manager for Emerging Markets Equities at GAM Investments, said despite short-term volatility, Beijing's “comprehensive” response to the epidemic will help anchor the local market in longer run.
“We see attractive opportunities across consumer discretionary, technology, non-bank financials, renewables and healthcare,” he wrote in a note today.
The more open Hong Kong market bore the brunt of the pain today. The Hang Seng Index dropped as much as 4 per cent and touched its lowest level since April 2017 in morning trade.
“Hong Kong will always be affected by the US market, especially with such big movements,” said Steven Leung, executive director for institutional sales at UOB Kay Hian. “The A-share market is providing downside protection for Hong Kong.” ― Reuters
