Chinese Stock Markets is Under Pressure as Coronavirus Spreads

Amid the widespread concern prevailing all across the globe about coronavirus threat, the Chinese stock market could not remain unaffected. As the death toll due to coronavirus surged over 300 in the last two days, the share market of the country is under severe pressure. Reports claim that the virus has already affected more than 14000 people that too only in China.

According to reports, the Chinese share market witnessed the worst day in several years as investors have also begun to react to the threats posed by the lethal virus.

The Shanghai Composite or SHCOMP fell 7.7 percent and the Shenzhen Component Index dipped almost 8.5 percent on the first day of trading after the prolonged Lunar New Year holiday. They were continued to remain shut since January 24, 2020. The sharp losses in the share market wiped out a combined $445 billion in market value.

The fear surrounding coronavirus appears to be spreading all across the globe as several countries have announced stringent measures like the travel ban and blocking the arrival of passengers from China.

Earlier, the Chinese share market opened with a massive drop of 8.2 percent on its composite index equivalent of S&P500.

The threat prevailing due to coronavirus has been felt across all assets that may include gold and Bitcoin.

However, this is a rare situation when an epidemic threat from the virus has impacted the share market but did not cause a rise in the price of gold. It registered a decline and fell to $1580 from the previous $1592 as commodity futures have been down presently.

Meanwhile, the Central bank of China, PBOC, tried to arrest the downfall by trying a quantitative easing step of injecting approximately 12 trillion RBM or $ 175 billion liquidity in trading. Experts claim that in the months to come, the economic output of China may receive a huge dent and economic control measures may not deliver desired results along with rising debts.

As the markets are facing a tough time in the current scenario due to threats posed by a coronavirus, investors may opt for hard assets and commodities such as gold.

Other markets in the Asian region witnessed a fall as well; however, their losses were not as significant as in China. The Japanese share market where 20 cases of coronavirus have also been reported nosedived. The Nikkei 225 or N225 dipped 1 percent. South Korea’s share market also registered a fall.