By Steven Russolillo
Hong Kong-listed stocks dropped sharply on their first trading day after the Lunar New Year break, as investors assessed the spreading Wuhan coronavirus and its impact on global growth.
The benchmark Hang Seng Index was down 2.9% Wednesday afternoon, catching up to a slide in global markets that took place earlier in the week. Markets in mainland China remain closed for the Lunar New Year holiday; they are scheduled to reopen next week.
The declines come as the number of confirmed cases and fatalities from the pneumonia-causing coronavirus continue to rise, with the death total climbing to at least 132 and confirmed infections rising to around 6,000.
"Financial markets are reacting nervously to the spread of the coronavirus, and more and more questions are being asked about the economic consequences," said Charlie Lay, a foreign-exchange strategist at Commerzbank in Singapore.
The Hong Kong government unveiled measures on Tuesday to limit travel to and from mainland China to try to contain the outbreak, though it stopped short of completely shutting the border. So far, there have been eight confirmed cases of the coronavirus in Hong Kong.
The main concern among global investors is that the virus could turn into a pandemic that cripples transportation, shopping, business meetings and weighs on economic growth. Luxury retailers, travel companies and casino stocks have been among the hardest hit shares in recent weeks.
On Wednesday, shares of Macau resort and casino operator Sands China Ltd. dropped more than 5% while Galaxy Entertainment Group fell nearly 5%. Chinese property developers China Evergrande Group and Sunac China Holdings Ltd. were down more than 4% and 5%, respectively.
Meanwhile, stock indexes in South Korea, Australia and Japan rose Wednesday. The gains came after U.S. stocks rebounded on Tuesday, with the S&P 500 rising 1% after suffering its steepest loss since October on Monday. The yuan strengthened slightly in offshore trading on Wednesday morning, then fell back to 6.9659 per U.S. dollar.
Seema Shah, chief strategist at Principal Global Investors, said part of the concern weighing on markets is the speed at which information travels today. The global spread of severe acute respiratory syndrome, or SARS, in 2003, by comparison, took place before the dawn of social media.
"The echo chamber to amplify market anxiety has never been more powerful, " she said.
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(END) Dow Jones Newswires
January 29, 2020 03:10 ET (08:10 GMT)
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