Chinese stock markets plunge on coronavirus fears – business live

Chinese stock markets plunged on Monday in a delayed investor reaction to the coronavirus outbreak that has seen increasing numbers of confirmed cases.

Shares on the Shanghai stock exchange composite index fell by 7.7% to a one-year low, while the CSI 300 index, which tracks the biggest shares in both Shanghai and Shenzhen, fell by 7.9%. Japan’s Topix index fell by 0.7%.

Markets had reopened after the extended lunar new year break that started on 23 January, accounting for the strength of the move. The fall was expected following weakening share prices in other countries, with economists expecting the outbreak unsurprisingly to weigh on economic activity.

Mark Haefele, chief investment officer, UBS Global Wealth Management, said:

While the severity of the onshore sell-off will dominate news headlines on Monday, the flat trade in offshore China equities (Hang Seng –0.1%) backs our thesis that today represents more of a catch-up. If anything, we think the magnitude of the sell-off appears less severe than market bear cases ahead of the open.

The People’s Bank of China was seen by economists as helping to prevent a deeper rout, after it responded to the outbreak over the weekend with measures to keep markets moving that included a £130bn stimulus package.

The central bank also on Monday made unusual comments on the stock market, saying that it expected markets to return to a rational state in the long run.

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Ian Williams, an economist at Peel Hunt, the stock broker, said:

China’s authorities have demonstrated their determination to deal with the economic implications of the coronavirus by cutting the key reverse repo rates by 10 basis points [o.1 percentage points] as soon as markets have reopened after the New Year. The move may help sentiment but there is still no urgency to rebuild risk exposure as the virus continues to spread.

There was further dispiriting news for economists fixed on China, as manufacturing purchasing managers’ index (PMI) data came in weaker than expected, with a reading of 51.1 points against an expectation of 51.3. However, the survey was carried out mostly before the extent of the coronavirus outbreak was known.

Meanwhile, Ryanair on Monday said that the effects of the ongoing Boeing 737 Max crisis will continue to impact it for as long as two years.

The Irish budget carrier is one of the biggest customers of the grounded jet. In a video message on Monday chief executive Michael O’Leary suggested Boeing’s delivery schedule could ultimately be up to two years late, meaning it may hit its long-term 200m passenger target by March 2026 rather than March 2024.