'Corona Shock' Chinese Stock Market Plummets 8.73% (Comprehensive)

First Day of Selling Frenzy After 11-Day Closure
KOSPI and Nikkei Also Start with Over 1% Drop
Global Financial Markets Fear 'Domino Impact'

[Image source=Reuters Yonhap News]

[Asia Economy Reporters Hyunjin Jeong and Minwoo Lee] Due to the rapid spread of the novel coronavirus infection (Wuhan pneumonia), the Chinese stock market plummeted by nearly 9%. Asian stock markets, including those in Korea and Japan, also showed declines in the 1% range. There are concerns that the "fear of C (the novel coronavirus)" will domino-effect and severely impact global financial markets in Europe, the United States, and beyond.

On the 3rd, the Shanghai Composite Index opened at 2716.7, down 8.73% from the previous trading day. The Shanghai Composite Index, which opened for the first time after the Lunar New Year holiday, could not withstand the impact of the novel coronavirus and plunged sharply. Since last month, the Shanghai Composite Index had been declining due to weakened investor sentiment amid the spread of the novel coronavirus, falling below the 3000-point mark on the 23rd of last month.

The Japanese Nikkei 225 index was trading at 22,960.72 at 10:34 a.m., down 1.05% from the previous trading day. The TOPIX index also fell 0.80% at the same time. The Nihon Keizai Shimbun reported, "Due to concerns that the spread of the novel coronavirus will slow the global economy, the U.S. stock market and others plunged," diagnosing that "the contraction of investor sentiment is impacting the stock markets."

The Korean stock market also faltered. On the day, the KOSPI opened at 2086.61, down 32.40 points (1.53%) from the previous close, and recorded 2091.73 at 10 a.m. The KOSDAQ also opened at 631.82, down 10.66 points (1.66%) from the previous close, and showed 632.43 at the same time. At that time, individual and foreign investors in the Korean stock market sold a net 75.5 billion KRW and 85 billion KRW, respectively. Institutions bought a net 161.3 billion KRW.

The top 10 stocks by market capitalization all declined. Samsung Biologics showed the largest drop, down 3.41% compared to the previous trading day as of 10 a.m. Other stocks such as Celltrion (2.42%), Hyundai Motor (2.40%), Hyundai Mobis (2.40%), and Samsung C&T (2.30%) also showed declines in the 2% range. Additionally, LG Household & Health Care (1.75%), LG Chem (1.33%), SK Hynix (1.50%), and Samsung Electronics (1.06%) also fell.

The prevailing outlook is that global stock markets will continue to struggle due to the novel coronavirus situation for the time being. Seung Eun Jeong, a researcher at Yuanta Securities, analyzed, "The global stock market, which had been rallying following the signing of the U.S.-China Phase 1 trade agreement on the 15th of last month, is now facing a new negative factor in the form of the novel coronavirus," adding, "Looking at past cases such as Severe Acute Respiratory Syndrome (SARS) and Middle East Respiratory Syndrome (MERS), these had a certain negative impact on economic fundamentals and acted as short-term downward pressure on the stock market." Researcher Jeong added, "It is expected that at least 3 to 4 months will be needed until the situation is resolved, and the impact will be particularly significant on Asian countries neighboring China."

The won-dollar exchange rate opened at 1197.0 won in the Seoul foreign exchange market, up 5.2 won from the previous trading day. This is the highest level in over four months since it recorded 1197.5 won on October 8 of last year, based on the opening price. Shortly after opening, the exchange rate surged to 1197.75 won but then narrowed the increase, trading at 1195.80 won as of 10:18 a.m. As the spread of the novel coronavirus is expected to negatively affect the global economy, investors showed risk-averse behavior, causing the won's value to plunge sharply.

This content was produced with the assistance of AI translation services.