selling off as fresh concerns over the coronavirus outbreak rippled through global markets on Thursday.
The offshore renminbi, which trades in major hubs outside mainland China, dropped below Rmb7 (91.5 cent) to the US dollar for the first time this year. It has tumbled more than 2 per cent since January 20.
Health authorities said the country has confirmed 7,711 cases of coronavirus. The contagion has spread outside China, with almost 100 cases as far away as the US and Germany.
The World Health Organisation will meet in Geneva on Thursday afternoon to decide if the current outbreak constitutes a Public Health Emergency of International Concern and what action will be taken in response.
China’s offshore renminbi slipped 0.4 per cent to Rmb6.9950 per dollar, its weakest level since December as concerns around the outbreak weighed on sentiment.
"Fears over the spread of coronavirus and its likely human and economic impact are rising," said Richard McGuire, a strategist at Rabobank, who warned that any attempt to quantify the long-term market reaction was "fraught" with difficulty.
Stock markets across Asia fell, led by a nearly 5 per cent fall for Taiwan's Taiex index as traders returned from holiday. Tech stocks with heavy exposure to China were the hardest hit as Foxconn, the world's largest contract electronics manufacturer, fell by 10 per cent, its largest one-day drop in 20 years.
Hong Kong’s Hang Seng fell 2.6 per cent, Japan’s Topix index ended the day down 1.5 per cent and the Kospi in South Korea shed 1.6 per cent.
European shares
European shares opened 1 per cent lower, with losses across the region’s major bourses from London to Frankfurt. The Iseq was almost 1 per cent weaker by mid-morning.
Futures trading was pointing to losses of about 1 per cent on Wall Street.
Assets seen as havens in times of market stress gained. Gold, the Swiss franc and Japanese yen rose while government bonds rallied. Oil prices pulled back with Brent crude down 1 per cent to $59.21 a barrel.
Investors have struggled to price the effects of the outbreak, with Asia bearing the brunt of the negative sentiment and past sell-offs in Europe and the US followed by sharp rebounds. But the impact of the virus is spreading, with airlines suspending routes, tech groups and automakers closing factories and warnings that China’s economic growth could be slashed.
“In a scenario of widespread infection, the virus could materially weaken economic growth and fiscal positions of governments in Asia,” rating agency S&P Global said in a report on Thursday.
Beijing has responded with radical measures to tackle the outbreak, pledging to build hospitals in record time and flying in doctors from across the country.
All 170 known deaths from the virus have been in China, mostly in central Hubei province, where the outbreak began. Around 50 million people in the province have been quarantined by a shutdown of rail, road and air links.
By Thursday, the virus had spread to every province in China, including the first confirmed case in politically and geographically isolated Tibet. – Copyright The Financial Times Limited 2020
