The Shanghai Composite Stock index plunged 7.7% and the Shenzhen Composite index tumbled 8.4% Monday, following a 10-day Chinese New Year’s break marked by government efforts to bring a spreading coronavirus outbreak under control.
The Chinese government's latest official tally showed 17,205 confirmed coronavirus cases and 361 deaths on the mainland attributed to the virus.
Hong Kong’s Hang Seng index, which fell almost 6% over the same 10-day period, edged up 0.17% Monday, while India’s S&P BSE Sensex index posted a 0.13% gain.
In the wake of a 1.8% drop for the U.S. market’s S&P 500 index Friday, other major markets in the region ended lower Monday with declines of 1.3% for Australia’s S&P/ASX, 1.2% for Singapore’s Straits Times index and 1% for Japan’s Nikkei 225 index.
In an interview, Tai Hui, Hong Kong-based Asia chief market strategist with J.P. Morgan Asset Management, said with millions on the mainland returning to work now from the Chinese New Year’s holiday and shortages of testing kits for the virus being addressed, the rapid rise in confirmed cases that has kept markets on edge over the past week or so could well continue in coming weeks.
More than 2,800 new cases have been confirmed over the past 24 hours, noted Mr. Hui, who contended the next two weeks would be critical in assessing how effective government steps — including quarantining the population of Wuhan, the city of 11 million where the virus originated — have been.
It’s too early to talk about a turning point but when the situation starts to stabilize — in terms of the number of new cases — experience with past health crises would suggest economic activity can recover pretty swiftly, Mr. Hui said.
A situation that stabilizes by April or May will be more manageable than it would be if it extends through the summer, he said. And forecasts on the potential hit to China’s GDP will have to take into account how aggressive Beijing proves in taking steps to offset that impact with policy stimulus, he said.