Financial news

Hong Kong stocks tumble on coronavirus fears

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Via Financial Times

Hong Kong stocks tumbled as companies listed in the Asian financial hub were hit by the rapid spread of the deadly coronavirus.

The benchmark Hang Seng index fell 2.6 per cent on Wednesday morning after traders returned from the long lunar new year holiday and a day after local authorities restricted travel from the mainland as they sought to contain the outbreak. 

Chinese officials on Wednesday said the death toll from the coronavirus, which originated in the now quarantined city of Wuhan, had risen to 132, while the number of confirmed cases in China climbed to 5,974. 

The Hang Seng China Enterprises index, which tracks the performance of large Chinese companies listed in the territory, slipped 3 per cent.

Hong Kong’s flag carrier Cathay Pacific, which said on Tuesday it would sharply reduce flights to mainland China as a result of the epidemic, gave up 3.6 per cent. Chinese technology group Alibaba dipped 2.7 per cent.

HSBC, Europe’s biggest bank by assets, was 2.1 per cent lower. The lender makes about 80 per cent of its profits from Hong Kong and mainland China.

Technology stocks listed in Hong Kong were hit by smartphone maker Apple’s announcement that the spread of the coronavirus would affect its supply chain, much of which is focused on China. AAC Technologies was 4.4 per cent lower.

Wharf Real Estate, which operates large shopping centres in Hong Kong and relies on Chinese tourists for revenue, dipped 3.8 per cent. Visitors to the territory from mainland China have plunged in recent months as a result of long-running anti-government demonstrations.

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The sharp sell-off came after Carrie Lam, Hong Kong’s chief executive, said on Tuesday that the city would suspend rail services to China from Thursday. Hong Kong will halve the number of flights between the territory and mainland China, as well as suspending visitor permits for Chinese tourists.

The spread of the coronavirus could hurt Hong Kong’s economy, already in a recession after months of sometimes violent protests and a slowdown in Chinese growth.

Markets in Shanghai and Shenzhen remain closed on Wednesday for the new year holiday. Both had been due to reopen on Friday, but China’s central bank on Tuesday said it would extend the holiday to the end of this week. Shanghai’s local government has ordered businesses in the mainland Chinese financial hub to remain closed until February 9.

Elsewhere in markets, Japan’s benchmark Topix edged 0.3 per cent higher. Brent, the international oil marker, gained 1 per cent to move back past $60 per barrel. 

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