China, Hong Kong stocks fall as virus fears spread

Chinese stocks tumbled Monday as investors sold out on fears about the global spread of the coronavirus and its potential impact on the world economy, analysts said. The benchmark Shanghai Composite Index closed down 3.40 percent, or 98.18 points, at 2,789.25, while the Shenzhen Composite Index on China's second exchange fell 4.83 percent, or 86.96 points, to 1,712.02.

Hong Kong's Hang Seng Index finished down 4.03 per cent, or 969.34 points, at 23,063.57. The losses were in line with another plunge across Asia as emergency policy easing measures by central banks including the US Federal Reserve, the Bank of Japan, and the Reserve Bank of Australia failed to ease investors' worries.

The China losses came despite a People's Bank of China cut in the reserve requirement ratio for some commercial lenders, which the central bank said was expected to have released liquidity of around 550 billion yuan (USD 78.5 billion) into the market. The measure may have been timed to blunt the impact of Chinese economic data also released on Monday that showed industrial production had contracted for the first time in three decades because of the outbreak.

Industrial production for January and February shrank 13.5 per cent on-year, missing forecasts of three percent drop. Retail sales plummeted 20.5 per cent -- also its worst showing in decades -- after rising eight per cent in 2019. Analysts had expected a four-percent fall.

"Although the Chinese government rolled out stimulus measures to support the virus-hit economy, the Chinese market remained weak today," Wanlong Securities said in a daily market commentary. "As the coronavirus spreads globally, demand for consumer goods is falling and will not easily rebound soon." Shanghai-listed CITIC Securities slumped 5.30 per cent to 22.67 yuan and Shenzhen-listed telecoms giant ZTE dropped the maximum 10 per cent to 45.71 yuan..

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