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Chinese Stock Plunges as Coronavirus Strikes

Stocks in China plunged on Thursday (23/01) as a rapid spread of China’s coronavirus which has infected close to 600 people and killed 17 lives roams around the city of Wuhan, China. Wuhan is suspected to be the virus’ origin which caused authorities to lock down the city while also canceling outbound trains and flights and halting public transportation. The outbreak prompted the Chinese index’s worst single-day percentage drop since last May, where China’s Shanghai Composite (SHCOMP) fell 2.75%, while the Shenzhen component dropped 3.52%.

Unfortunately, the outbreak itself coincides with the Lunar New Year, a time wherein millions of people travel throughout the region. This simultaneously caused traders rushing to sell before markets close for the Chinese New Year holiday. The impact caused by the virus extends to neighboring countries, where Hong Kong, Japan, and South Korea are nevertheless affected. The outbreak led their index to fall by 1.5% (HSI, Hong Kong), 1% (N225, Japan), and 0.9% (KOSPI, South Korea), respectively.

The fast-spreading virus affected the stocks of several other markets, one of which impacted airline stocks to descent due to travel restrictions where Air China fell 4.4%, and China Southern Airlines fell 3.7%. Due to this, oil prices may take a hit as well. Contrary to airline stocks, healthcare stocks soar as investors anticipate an increased demand for drugs, masks, and other medicinal products. Shandong Lukang Pharmaceutical and Jiangsu Sihuan Bioengineering jumped by 10%, their daily limit.


Business Insider



The Wallstreet Journal

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