Chinese markets tumble on coronavirus fears

Chinese markets tumble on coronavirus fears”

In an internal memo sent to its branches, Citic called the move a "political task" aimed at helping stabilize the market on the first trading day of the stock market in the Lunar New Year of Rat as the coronavirus outbreak unsettles global markets.

The Shanghai Composite index shed 8% to hit one-year low on Monday, wiping nearly $370 billion off the market value, according to Reuters calculations.

Chinese stocks plummeted by the most since an equity bubble burst in 2015 as they resumed trading to the worsening virus outbreak.

Technology companies, which do a lot of business with China, led the losses.

China's finance ministry will offer subsidies on interest payments for some firms hit by a spreading coronavirus outbreak, state-run newspaper Guangming Daily reported on Monday.

The yuan also weakened by almost 1.5 percent to around 7.00 to the dollar.

China's central bank said on Sunday it will inject 1.2 trillion yuan (about 174 billion USA dollars) in liquidity via reverse repo on February 3, in order to maintain ample liquidity amid the coronavirus outbreak.

Provinces and cities including Shanghai have further extended the holiday break to February 9, which could limit volumes, market strategists said.

The central bank will supply cash to money markets and banks were told to lend more and not call in loans to companies in Hubei and other affected regions. Australia's benchmark S&P/ASX 200 Index also dropped more than 1%. "That said, we still believe that economic activities should recover swiftly once the number of new cases comes under control, and subsequently market sentiment should also improve". China accounted for more than a third of the MSCI Emerging Markets Index at the end of 2019, which has dropped 10% from the January 17 highs.

On Friday, the Dow fell 2.1%, the S&P 500 declined 1.8% and the Nasdaq Composite dropped 1.6% as economists tempered their outlook for the world's second-largest economy.

The total number of deaths in China rose to 361 as of Sunday, up 57 from the previous day, the National Health Commission said.

The World Health Organization has declared the outbreak a public health emergency of worldwide concern, but said global trade and travel restrictions are not needed.

Countries have imposed travel restrictions on China, and factories and retailers including Apple and Starbucks have closed locations in the mainland, raising questions over the economic impact. China saw economic growth of 6.1 percent a year ago, the slowest in around three decades.

Additional reporting Yusho Cho in Shanghai.

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