Chinese stock markets took a beating on the first day of trading in over a week since the coronavirus emerged as a global public health crisis, with the Shanghai Composite Index tumbling 7.7 per cent at the close while the Shenzhen Component lost 8.45 percent.
About 3,000 companies on China’s two main exchanges fell by the 10 percent daily-allowed limit. The Hang Seng Index in Hong Kong, where a shorter Chinese New Year holiday is observed, had opened last Wednesday and gained slightly in today’s trading, up 0.17 percent.
Monday marked the first day partially back to business for the country. The usual weeklong Lunar New Year holiday in China was extended by three days nationally in the hope of curbing the spread of the virus, although several Chinese provinces and Shanghai mandated that work should be delayed by a further week to Feb. 10 for all but essential industries.
Wuhan, a city of 11 million people and the epicenter of the virus, and many parts of the province of Hubei remain under quarantine.
Global markets have had several days to factor in the impact of the coronavirus, with European luxury stocks taking a hit. This is the first chance that mainland Chinese markets have had to react.
Before the country went on holiday on Jan. 24, the number of cases numbered roughly 800. Now, known cases in China have exploded to more than 17,000, while deaths have reached 361 in the country. On Sunday, a man succumbed to the virus in the Philippines, making his death the first recorded fatality outside China.
Elsewhere around Asia-Pacific, the Australian ASX closed down 1.4 percent. The Nikkei was down 1.01 percent. South Korea’s Kospi was flat.
State-backed newspaper Global Times said that the outbreak could shave two percentage points off GDP growth this quarter, citing industry insiders, or about $60 billion.
One economist, Warwick McKibbin, a professor at the Australian National University, put the potential global economic losses at up to $160 billion, four times larger than the $40 billion blow from SARS.
With China being the world’s second largest consumer market, as well as the largest driver of international tourism, and the leading exporter of clothing and textiles, many sectors are bracing for a hit.
Retailers like Apple and Ikea temporarily shut their entire China operations, while Levi’s and Starbucks ceased operating half of their store network in the country. Three textile fairs — Chic Shanghai, Intertextile Shanghai and Yarn Expo — originally scheduled to be held March 11 to 13 will be postponed, organizers said today.
“Our teams are making every effort to find suitable alternatives, but we will only make the decision to go ahead with these fairs when it is deemed safe to do so,” said Wendy Wen, senior general manager of Messe Frankfurt, which organizes Intertextile and Yarn Expo.
Would-be Chinese tourists have been prevented from leaving the country during the peak holiday spending period. Many flight routes to and from China have been suspended and some countries — including the U.S., Australia, New Zealand, Indonesia, Vietnam and Singapore — are temporarily barring most travelers from the country.
Hong Kong announced Monday it would tighten border controls further with mainland China. Last week, it blocked individual travelers from mainland China but stopped short of a complete travel ban, attracting the ire of some of the public. Thousands of the city’s health workers began a five-day strike on Monday demanding a complete sealing off of its border with the mainland.
The new measures announced shut down two major land border crossings — Lok Ma Chau and Lo Wu — with mainland China and the ferry terminal effective at midnight tonight, although one land border crossing at Shenzhen Bay and the Hong Kong-Zhuhai-Macau bridge remains open.