China Market falls as virus fears

Mainland China equity market finished session down on Wednesday, 08 April 2020, as market participants fretted over the impending economic fallout from the coronavirus pandemic. At closing bell, the benchmark Shanghai Composite Index declined 0.19%, or 5.39 points, to 2,815.37. The Shenzhen Composite Index, which tracks stocks on China's second exchange, dropped 0.16%, or 2.72 points, to 1,740.65. The blue-chip CSI300 index sank 0.47%, or 17.68 points, to 3,780.34.

Investors optimism about a possible slowing in the coronavirus pandemic faded, after China reported no virus-related deaths Tuesday for the first time since January, said on Wednesday morning that two people have since died. Meanwhile, the US has the most cases in the world and most of its states are under lockdown. New York, the epicentre of the outbreak in the US, saw its highest daily death toll of 731, as did the entire US, with 1,970 people dying on Tuesday. In the UK, 786 people died on Tuesday.

More than half of the planet's population is under lockdown, and governments and central banks have thrown massive fiscal and monetary stimulus at the virus, which has dragged the world into a recession. Globally, more than 1.4 million have been infected by the coronavirus so far while at least 81,000 lives have been taken, according to data compiled by John Hopkins University.

Several market participants pointed out that although the outbreak on mainland China was largely under control, economic disruption was likely to continue for a longer period of time as unemployment levels may be slow to normalise after many small businesses were forced into bankruptcy

The agriculture, forestry, animal husbandry and fishery sector, led the fall on Wednesday, with Jiangsu Lihua Animal Husbandry Co and Baiyang Investment Group both lost over 8%.

Food and beverage shares also pulled back in general. CSPC Innovation Pharmaceutical Co plunged by the daily cap of 10%, while Shandong Huifa Foodstuff Co fell over 6%. Insurance companies, the medical industry and brokerages also posted losses.

Stocks related to RCS, however, maintained their strong performance, with Beijing Ultrapower Software Co, ZJBC Information Technology Co and Richinfo Technology Co all soaring by the maximum 10%. Shares related to online tourism also jumped in general.

CURRENCY NEWS: China's yuan retreated from a three-week high against the dollar on Wednesday, despite China central bank fixed firmer mid-point rate. Prior to the market opening, the People's Bank of China (PBOC) set the midpoint rate CNY=PBOC at 7.0483 per dollar, 456 pips or 0.65% firmer than the previous fix of 7.0939, the firmest since March 30. In the spot market, onshore yuan CNY=CFXS opened at 7.0600 per dollar and was changing hands at 7.0680 at midday, 235 pips firmer than the previous late session close.

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