China Stocks mixed amid coronavirus contagion fears

Mainland China equity market pared some losses on Wednesday, 22 January 2020, after dropping more than 1% in the morning, with investor sentiment dampened amid fears over the growing spread of a new Sars-like coronavirus from China and weighed the possible consequences of a global pandemic. Around late afternoon, the benchmark Shanghai Composite Index declined 0.23%, or 7.11 points, to 3,045.03. The Shenzhen Composite Index, which tracks stocks on China's second exchange, reversed into gains and added 0.06%, or 1.07 points, to 1,807.61. The blue-chip CSI300 index was down 0.09%, or 3.61 points, to 4,110.70.

Market sentiment has turned mildly negative amid fears of contagion, particularly as millions travel for Lunar New Year festivities. China's National Health Commission have confirmed more than 400 cases of the illness with nine deaths so far, which has evoked memories of the 2003 outbreak of severe acute respiratory syndrome, or SARS, in China that killed nearly 800 people and hurt world travel. Health officials have also confirmed virus's outbreak in China, which originated in the city of Wuhan, has reached the United States, Thailand, South Korea, Japan and Taiwan. The World Health Organization (WHO) meets later on Wednesday to consider whether the outbreak is an international emergency.

Overnight on Wall Street, stocks declined after the Centers for Disease Control confirmed the first U.S. case of a mysterious coronavirus that has infected hundreds in China. The Dow Jones Industrial Average fell 152.06 points to close at 29,196.04 while the S&P 500 slipped 0.3% to end its trading day at 3,320.79. The Nasdaq Composite also shed 0.2% to close at 9,370.81.

Technology shares including semiconductor makers advanced broadly, extending a rally driven by investors' hopes that earnings will improve as the industry cycle is bottoming out. Jiangsu Jiejie Microelectronics (300623 SZ) jumped by the 10% daily limit to 38.13 yuan. The stock has soared by 45% so far this year, on its recent forecast that its 2019 net profit is likely to increase by 10% to 20% from a year ago.

Airlines, other travel-exposed stocks and retailers vulnerable to shifts in consumer sentiment have borne the brunt of selling in the past two days along with the Chinese yuan.

CURRENCY NEWS: The Chinese yuan strengthened against greenback after firmer midpoint fixing by the People's Bank of China. Both the onshore and offshore Chinese yuan recovered from earlier lows above 6.91 against the dollar, last trading at 6.9021 and 6.9018, respectively.

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