CORONAVIRUS | Near-term shock to Chinese economy will be much higher than SARS period, says analyst.
Investors erased US$420 billion from China's benchmark stock index today, sold the yuan and dumped commodities as fears about the spreading coronavirus and its economic impact drove selling on the first day of trade in China since the Lunar New Year.
By lunchtime, the benchmark Shanghai Composite index sat eight percent lower near an almost one-year trough and poised to post its worst day in more than four years. The new virus has created alarm because it is spreading quickly, much about it is unknown, and authorities' drastic response is likely to drag on economic growth."It's uncertain whether factory workers or how many of them, will return to their factories," she said.
Copper sank to its lowest in more than three years, falling by its daily limit of seven percent, while aluminium, zinc and lead shed more than four percent and soybeans dropped two percent. Amid the selldown, the People's Bank of China injected 1.2 trillion yuan into money markets through reverse bond repurchase agreements. It also unexpectedly cut the interest rate on those short-term funding facilities by 10 basis points.
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