New Coronavirus 'Shock'... Chinese Stock Market Plummets 8% After Spring Festival Close (Comprehensive)

[Image source=EPA Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] On the 3rd, the Chinese stock market reopened after the Spring Festival (Chinese New Year) holiday and closed with an 8% plunge due to the impact of the spread of the novel coronavirus infection (Wuhan pneumonia). Major Asian stock markets were also hit.

The Shanghai Composite Index closed at 2746.61, down 7.72% (229.92 points) from the previous trading day on January 23. This is the largest intraday drop since August 24, 2015 (8.5%). The CSI 300 Index also fell 7.88% (315.54 points), and the Shenzhen Composite Index closed at 1609.00, down 8.41% (147.81 points).

The Chinese stock market resumed trading after 11 days following the Spring Festival holiday that began on January 24. During the holiday, the novel coronavirus rapidly spread worldwide, causing major stock markets in the US, Europe, Japan, and South Korea to continue declining daily. Accordingly, the Chinese stock market was expected to open with a significant drop.

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

Following the crash in the Chinese stock market and the decline in the US New York stock market on January 31, major Asian stock markets also showed a downward trend. In the Tokyo stock market, the Nikkei 225 Index closed at 22,971.94, down 1.01% (233.24 points) from the previous trading day. The TOPIX Index closed at 1672.66, down 0.70% (11.78 points).

South Korea's KOSPI Index also closed lower. The KOSPI Index ended at 2118.88, down 0.01% (0.13 points) from the previous trading day. However, the KOSDAQ Index closed at 646.85, up 0.68% (4.37 points). Australia's ASX 200 Index fell 1.34% compared to the previous trading day.

However, the Hong Kong Hang Seng Index, which resumed trading earlier on January 29, closed at 26,370.59, up 0.22% (57.96 points) that day. The Hang Seng Index fell 4.41% on January 29 compared to the previous trading day after the Spring Festival holiday and continued to drop nearly 3% more until that day.

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