China Market tumbles on virus fears

Mainland China equity market finished session steep lower on Tuesday, 21 January 2020, on deepening fears over the outbreak of a new pneumonia coronavirus in mainland China, after the country confirmed the first person-to-person spread of a new virus in central city of Wuhan, which has killed four people so far. Meanwhile, a downgrade of Hong Kong's rating by credit rating agency Moody's on Monday also weighed on blue-chip stocks. Most of SSE sectors declined with shares of airlines, cinema and casino operators being notable losers, as investors expected spending to soften during the Lunar New Year holiday because of the new coronavirus, while drug-makers surged. At closing bell, the benchmark Shanghai Composite Index declined 1.41%, or 43.64 points, to 3,052.14. The Shenzhen Composite Index, which tracks stocks on China's second exchange, dropped 1.28%, or 23.42 points, to 1,806.54. The blue-chip CSI300 index was down 1.71%, or 71.52 points, to 4,114.31.

Market commenced trading with a back foot amid increasing concerns over a new strain of coronavirus after the country confirmed the first person-to-person spread of a new virus in central city of Wuhan, which has killed four people so far.

A new coronavirus has spread from the central city of Wuhan to cities including Beijing and Shanghai, with more than 200 cases reported so far. Four cases have been reported outside China - in South Korea, Thailand and Japan.

Airline operators declined broadly amid concerns about the new coronavirus outbreak. Tianjin Airlines, based in the northern Chinese city of Tianjin, said it would waive flight cancellation fees for passengers having a fever flying between January 15 and February 29.

Healthcare sector rose, with total of 28 stocks jumped by the daily limit of 10%, including antibiotics maker Shandong Lukang Pharmaceutical. Wuhan Guide Infrared, a maker of infrared cameras and thermal imaging systems, soared by the 10% daily limit after train stations and the airport in Wuhan city installed its equipment to identify passengers with symptoms of the illness.

Chinese home appliances maker Midea Group (000333 SZ) dropped by 3% to 58.43 yuan after it became the first A-share stock this year to hit the 28% cap on foreign ownership. Foreign investors together owned 1.95 billion shares in the industrial conglomerate as of Tuesday, through channels including the Stock Connect with Hong Kong, according to data from the Shenzhen Stock Exchange. Offshore investors are not allowed to buy Midea shares any more after they hit the limit, but are permitted to sell.

CURRENCY NEWS: The Chinese yuan strengthened against greenback after firmer midpoint fixing by the People's Bank of China. Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate CNY=PBOC at 6.8606 per dollar prior to the market open, 58 pips or 0.08% firmer than the previous fix of 6.8664 and the strongest since July 2, 2019. The spot yuan CNY=CFXS edged up to a six-month high on Monday, with traders expecting the currency to stay firm before the week-long Lunar New Year holiday.

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