Chinese stocks plummet as coronavirus outbreak worsens

China’s stock markets reopened to massive losses Monday as investors continued to grapple with the increasingly dire coronavirus outbreak.

The Shanghai Composite Index closed down 7.7 percent at 2,746.61, suffering its worst daily drop in more than four years on the first day of trading after an extended Lunar New Year holiday.

Some $393 billion was reportedly taken off the benchmark Chinese index as more than 2,500 stocks sank by the 10 percent daily limit amid pressure from the coronavirus, which has killed more than 360 people and sickened more than 17,000.

The CSI 300 Index also closed down 7.9 percent — the largest loss since August 2015 — with technology, telecom and commodities companies leading the way, according to Bloomberg News.

“It is really hard to trade stocks,” Li Shuwei, the chairman at Beijing WanDeFu Investment Management Co., told Bloomberg.  “It’s impossible to predict how this disease will develop. Even the experts have no clear idea when the outbreak will end, let alone stock traders.”

But US stock futures pointed to modest gains Monday morning, despite the huge declines abroad. Dow futures were up 0.4 percent at 28,318.00 as of 6:59 a.m. after the blue-chip index lost more than 600 points on Friday. Nasdaq futures were recently up about 0.5 percent at 9,046.00, while S&P 500 futures rose 0.5 percent to 3,240.00.

Monday was the first chance that Chinese markets had to react to the outbreak since Jan. 23, when the death toll from the virus was just 17. The Shanghai Composite also reportedly saw the worst end to a lunar year in its history ahead of the roughly week-long holiday, which the Chinese government extended as the virus spread.

The People’s Bank of China flooded money markets with 1.2 trillion yuan, or about $173.8 billion, and cut an interest rate by 10 basis points as the stock market sank, a move apparently meant to support growth as the virus threatens the Chinese economy.

“It is a clear message that they want to take growth-supportive measures and keep the market reassured,” said Mayank Mishra, a macro strategist at Singapore’s Standard Chartered Bank.

With Post wires

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