Chinese shares fell to near two-month lows yesterday – which was not unexpected given the way the coronavirus crisis continues to grow.
Trading resumed after the Lunar New Year break and fell on fears the coronavirus epidemic would hit demand in the world’s second-largest economy.
Aiming to limit the impact of any impact, the Chinese government took steps to shore up an economy hit by travel curbs and business shut-downs because of the virus.
Liquidity was pumped into the markets, short selling as banned and Chinese institutions were encouraged to support shares.
Despite the support, Chinese shares fell deeply, with a fall of more than 9% in early trading to lows not seen for four months. The Shanghai market ended the session down 7.72%.
The Shanghai Composite index lost $A379 billion of its value while the yuan opened at its weakest level in 2020, sliding past the symbolic seven-per-(US) dollar level.
MSCI’s broadest index of Asia-Pacific shares outside Japan down for an eighth straight day to be off 0.9 percent at 527.39 points, its lowest since early December.
Japan’s Nikkei lost 1% to the lowest since November and Australia’s ASX 200 index ended 1.4% lower.
