Chinese markets plunged on Monday (Feb. 3) as they returned to trade following an extended Lunar New Year break, amid an ongoing coronavirus outbreak. The deadly pneumonia-like virus has killed 361 people and infected 17,205 in the country.
The World Health Organisation (WHO) recognised the coronavirus as a global health emergency last week, citing concern that the outbreak continues to spread to other countries with weaker health systems.
The Shanghai composite plummeted 7.72% to close at about 2,746.61, its worst daily drop in four years while the Shenzhen component crashed 8.45% to end its trading day about 9,779.67. The Shenzhen composite also declined 8.414% to close at around 1,609.00.
The three indices all fell around 9% in early trade during the session with investors erasing almost $400 billion from Chinese stocks. In the meantime, the People's Bank of China announced it would inject 1.2 trillion yuan (approx. $173.8 billion) into the economy. The central bank's move comes amid worries the outbreak of the coronavirus will affect growth.
An IHS Markit survey of China’s factory activity also came in on Monday, showing the Caixin China General Manufacturing Purchasing Managers' Index (PMI) decreased to 51.1 in January. That was below expectations of 51.3 by economists in a Reuters poll.
Beijing accused Washington of "overreacting" to the outbreak
On the political front, Chinese foreign ministry has reportedly accused the U.S. of overreacting to the coronavirus outbreak, spreading panic worldwide instead of providing significant assistance.
“All it has done could only create and spread fear, which is a bad example,” Chinese foreign ministry spokeswoman Hua Chunying told an online news briefing, according to Reuters.
Chunying said the United States was the first country to suggest the partial withdrawal of its embassy staff, and the first to impose a travel ban on Chinese travellers. Other countries have been trying to block the virus with travel restrictions, including Australia, Italy, Japan, Pakistan, Russia and Singapore.
Hong Kong Chief Executive Carrie Lam said on Monday that the autonomous city will close all border crossings with mainland China on Tuesday, except for the Shenzhen Bay joint checkpoint and the Hong Kong-Zhuhai-Macau Bridge.
The WHO has said travel bans are unnecessary, warning that such restrictions can cause more harm than good.
The organisation reported at least 151 confirmed cases have been reported in 23 other countries and regions, including the United States, Japan, Thailand, Hong Kong, the UK, Russia and Germany
The coronavirus outbreak has now killed more people than Sars in 2003. Investors continue to fret about the rapid spread of the disease and the impact on the world economy.