Asia report: Hong Kong stocks sink on return from holiday

Markets in Asia finished in a mixed state on Wednesday, with stocks in Hong Kong plunging on the back of the Wuhan coronavirus outbreak, as the city returned from the Lunar New Year holiday.

In Japan, the Nikkei 225 was up 0.71% at 23,379.40, as the yen strengthened 0.06% against the dollar to last trade at JPY 109.08.

The benchmark’s major components were in the green, with automation specialist Fanuc up 0.61%, Uniqlo owner Fast Retailing rising 1.23%, and technology conglomerate SoftBank Group 2.24% firmer.

Apple suppliers were mixed in the region, after chief executive officer Tim Cook said the coronavirus outbreak was affecting the California consumer technology giant’s operations in the country overnight, after confirming positive sales numbers for the latest iPhone.

Among the Japan-listed suppliers, Murata Manufacturing was down 0.58% while Sharp rose 0.13%.

The broader Topix index was 0.45% firmer by the close of trading in Tokyo, ending the day at 1,699.95.

Markets in mainland China remained closed for the Lunar New Year holiday, which authorities in Beijing have extended in a bid to get a handle on the spread of the coronavirus outbreak.

South Korea’s Kospi was 0.39% higher at 2,185.28, while the Hang Seng Index in Hong Kong sank 2.82% to 27,160.63 as the city returned from its holiday.

Tourism and travel firms were among the leading losers in the special administrative region, with China Eastern Airlines and China Southern Airlines down 3.43% and 3.65%, respectively.

Gambling stocks were down on fears the virus would affect mainlanders travelling to casino hotspot Macau, with Melco International Development down 5.18% and Wynn Macau off 4.11%.

Insurers were also on the back foot, with life insurance giant AIA down 2.65% and China Life Insurance off 3.59%.

At the weekend, Hong Kong’s chief executive Carrie Lam declared an emergency in the city due to the Wuhan coronavirus, meaning schools would remain closed until at least 17 February, and all official visits to the mainland would be suspended.

Flights and trains between the city and Wuhan were also being cancelled, with official celebrations of the Lunar New Year also not going ahead in Hong Kong.

Looking at Hong Kong-listed Apple suppliers, AAC Technologies was down 4.16% and Sunny Optical was off 1.77%, while on the Korean bourse, LG Display was ahead 1.37%.

The other blue-chip technology stocks were also in the green in Seoul, with Samsung Electronics up 0.51% and chipmaker SK Hynix rising 1.66%.

“Despite the number of Chinese coronavirus cases now outstripping the SARS epidemic of the early noughties, and the Hang Seng entering the Lunar New Year down 3%, the European indices pushed ahead with their rebound on Wednesday,” said Spreadex analyst Connor Campbell at the end of the Asian session.

"It helped that Apple smashed it out of the park overnight - the demand for [the] iPhone 11 drove first quarter sales up 8% year-on-year to £91.8bn, topping analysts’ estimates by around $3 billion."

However, Campbell pointed out that even that blockbuster update wasn’t free of the coronavirus.

“Apple has a huge, often performance-dictating, exposure to China, causing Tim Cook to reassure investors it was ‘closely monitoring’ the situation in the country.

“After all, reduced store hours and a populace on lockdown could come to impact the tech giant’s second quarter," he said.

Oil prices were higher as the region logged off for the day, with Brent crude last up 0.92% at $60.06 per barrel, and West Texas Intermediate ahead 0.89% at $53.96.

In Australia, the S&P/ASX 200 was up 0.53% at 7,031.50, while across the Tasman Sea, New Zealand’s S&P/NZX 50 slipped 0.07% to 11,676.51.

The down under dollars were both weaker against the greenback, with the Aussie last off 0.16% at AUD 1.4812, and the Kiwi off 0.35% at NZD 1.5332.