Asia report: Mainland markets plunge on return from holiday
Markets in Asia closed mostly lower on Monday, led lower by bourses in mainland China, which plunged on their first day back from the Lunar New Year holiday amid the ongoing outbreak of the Wuhan strain of coronavirus.
In Japan, the Nikkei 225 was down 1.01% at 22,971.94, as the yen weakened 0.15% against the dollar to last trade at JPY 108.51.
Automation specialist Fanuc was up 0.3%, while among the benchmark’s other major components, Uniqlo owner Fast Retailing lost 2.93%, and technology giant SoftBank Group was 0.49% weaker.
The broader Topix index was off 0.7% by the end of trading in Tokyo, ending its trading session at 1,672.66.
On the mainland, the Shanghai Composite plunged 7.72% to 2,746.61, and the smaller, technology-heavy Shenzhen Composite was 8.41% lower at 1,609.00.
It was the first session back for markets in China after the Lunar New Year holiday, which authorities in Beijing had extended in a bid to get a handle on the spread of the virus.
On Sunday, the People’s Bank of China announced it would inject CNY 1.2trn into the country’s markets through open market reverse repo moves.
As a result, the central bank said the total liquidity in the market would be up CNY 900bn on the same time last year.
“The situation in China looks pretty dire and globally we now have more 17k cases confirmed and 362 deaths,” said Neil Wilson, chief market analyst at Markets.com.
“Apple will close all stores and offices in China.”
Wilson said the outbreak had the hallmarks of a “black swan event” in the making, with markets simply not knowing what the final impact will yet be.
“China is a far larger portion of global GDP than it was in 2003 - about 18%.
“Cool heads play it down, and we should remain level-headed here, but this is how crises can start.”
On the data front, the private Markin/Caixin manufacturing purchasing managers’ index came in at 51.1 for January on Monday.
That was short of expectations for 51.3 as picked by economists polled by Reuters, but still indicated expansion in the sector as the reading was above 50.
Beijing’s official manufacturing PMI came in at a flat 50 for the month on Friday, which indicated no growth but also no contraction.
Officials and market watchers have both cautioned that the latest PMI figures were not reflective of the full impact of the coronavirus outbreak.
South Korea’s Kospi closed just below the waterline, finishing down 0.006% at 2,118.88, while the Hang Seng Index in Hong Kong managed gains of 0.17% to 26,356.98.
Both of the blue-chip technology stocks were higher in Seoul, with Samsung Electronics up 1.42% and chipmaker SK Hynix 1.28% firmer.
Oil prices were mixed at the end of the Asian session, with Brent crude unchanged at $56.62 per barrel, and West Texas Intermediate off 0.58% to $51.86.
In Australia, the S&P/ASX 200 lost 1.34% to close at 6,923.30, with shares in major miner BHP falling 2.92% in Sydney trading.
Across the Tasman Sea, New Zealand’s S&P/NZX 50 was 1.43% lower at 11,550.16, as travel and tourism stocks plunged on the country’s latest response to the coronavirus threat.
New Zealand’s government has banned anyone travelling from or transiting through mainland China from landing in the country, other than citizens and their families.
It said it was to prevent the spread of the virus to both New Zealand, and the far more fragile populations in Pacific Island nations, to where most visitors transit through New Zealand.
Flag carrier Air New Zealand lost 2.8%, airport operator AIAL was off 2.9%, casino firm SkyCity Entertainment was 1.9% lower, and Tourism Holdings was down 6.4%.
The down under dollars were a mixed picture against the greenback, with the Aussie last 0.08% stronger at AUD 1.4939, and the Kiwi retreating 0.05% to NZD 1.5472.