Chinese Stock Market Drops 8% After Spring Festival... Asian Major Markets Close Lower

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] On the 3rd, the Chinese stock market, which reopened after the Chunje (Chinese New Year) holiday, plunged 8% due to the spread of the novel coronavirus infection (Wuhan pneumonia). As a result, major stock markets in Asia were also hit.

According to Bloomberg News, as of 3:21 PM Korea time, the Shanghai Composite Index was trading at 2,739.53, down 7.96% (237.00 points) compared to the previous trading day on the 23rd of last month. At the same time, the Shenzhen Composite Index also fell 8.03%.

The Chinese stock market resumed trading after 11 days following the Chunje holiday period, which started on the 24th of last month. During the Chunje holiday, the novel coronavirus rapidly spread worldwide, causing major stock markets in the US, Europe, Japan, and Korea to continue their downward trend daily. Accordingly, the Chinese stock market was expected to open with a significant decline.

However, the decline on this day was even greater than initially expected. Although the People's Bank of China announced the day before that it would inject liquidity of 1.2 trillion yuan (approximately 205 trillion won) into the market through open market operations to prevent and control the novel coronavirus, it could not stop the sharp decline in the Chinese stock market. The Wall Street Journal (WSJ) reported that the daily drop in the Shanghai stock market was the largest since August 2015.

The Chinese exchange rate also moved significantly. On this day, the People's Bank of China set the dollar-yuan trading reference rate at 6.9249 yuan, up 0.54% from the previous close. However, the onshore and offshore yuan exchange rates against the dollar surged, surpassing 7 yuan. The stock market crash and the depreciation of the yuan indicate a capital outflow atmosphere in China due to the spread of the novel coronavirus, suggesting that this vicious cycle may continue for some time.

Due to the Chinese stock market crash and the decline of the US New York stock market on the 31st of last month, major stock markets in Asia also showed a downward trend. On this day, the Nikkei 225 index in the Tokyo stock market closed at 22,971.94, down 1.01% (233.24 points) from the previous trading day. The TOPIX index closed at 1,672.66, down 0.70% (11.78 points).

South Korea's KOSPI index also closed lower. The KOSPI index ended trading at 2,118.88, down 0.01% (0.13 points) from the previous trading day. However, the KOSDAQ index, which showed a downward trend early in the session, closed up 0.68% (4.37 points) at 646.85. The Australian ASX 200 index fell 1.34% compared to the previous trading day. The Hong Kong Hang Seng Index, which resumed trading on the 29th of last month ahead of the Chinese stock market, was trading up 0.3% as of 3:21 PM on this day.

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