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June 14, 2021 at 6:46 am #832leamejia475374Guest
By Noah Sin and Winni Zhou
HONG KONG/SHANGHAI, Jan 21 (Reuters) – China shares fell to their two-week lows and the yuan headed for its worst day in five-months on Tuesday on mounting worries about the spread of a new virus that has killed four people so far in the country.
The virus, which authorities confirmed spreads through human contact, broke out just ahead of the Lunar New Year holiday in the central city of Wuhan and has spread to Beijing, Shanghai and other cities, with more than 200 cases reported so far.
<b>Mainland China’s financial markets will be closed during the holiday between Jan. 24 and 31.</b>
“The ultimate fear is that this may spread with the tremendous human flow during the holiday,” said Alex Wong, managing director at Ample Finance in Hong Kong. “The selling originated in travel related stocks and is now spreading out.” The Shanghai Composite Index ended down 1.4%, hitting its lowest point so far this year, while the blue-chip CSI300 dropped 1.7% to a two-week low.
Both benchmarks recorded their largest daily losses since Nov. 11, 2019, paring gains made on the back of investor optimism after the U.S.-China interim trade deal.
Shares of airlines, cinema and casino operators fell. But drugmakers across Chinese exchanges gained. The CSI 300 healthcare index rose 0.6%.
In Hong Kong, the Moody’s downgrade of the city further weighed on the stock market, which ended down 2.8% – its largest daily fall since early August and at its lowest closing level in a month.
Remarks by Chinese President Xi Jinping to make curbing the outbreak a top priority drew investors’ attention to the depth of the crisis, adding to selling pressure, said an onshore-based broker.
The virus evoked memories of the 2002/03 outbreak of Severe Acute Respiratory Syndrome (SARS), which also originated in China and killed hundreds globally.
But Zhang Qi, a Shanghai-based analyst at Haitong Securities, said the Wuhan virus does not yet warrant a sell-off.
“We have more experience in dealing with diseases,” he said. “We will need to watch whether it spreads further, but so far the scale is not that big.”
<b>Risk-off vibes also punished Chinese currency.</b>
The onshore yuan, down 0.6%, SM카지노 (mouse click the up coming document) was on track for its worst daily drop since August and posted its weakest onshore close in over a week at 6.9065 per dollar. It slid almost 0.7% in offshore trading.
The currency was on a tear earlier this month as China pledged to refrain from competitive devaluation, in a major de-escalation of trade tensions with Washington.
“Currently, (the Wuhan) virus might be the only reason explaining why market sentiment has changed all of a sudden,” a trader at a foreign bank in Shanghai said of the yuan’s U-turn.
Several traders in Shanghai said the trade deal-inspired appreciation was overdone, while noting that dollar demand usually rises among Chinese households and companies near the Lunar New Year for payments and overseas trips.
“Such purchases were held as the yuan kept strengthening in the last few weeks. And these pressures were released today,” said one of the traders. (Additional reporting by Samuel Shen in Shanghai, Donny Kwok in Hong Kong; Writing by Noah Sin in Hong Kong; Editing by Christian Schmollinger, Muralikumar Anantharaman and Anil D’Silva)