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Hong Kong stocks slump amid coronavirus travel lockdown

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·2-min read
Hong Kong Chief Executive Carrie Lam
Hong Kong chief executive Carrie Lam wears a mask as she announces travel restrictions in response to the coronavirus outbreak on 28 January. Photo: Tyrone Siu/Reuters

Hong Kong’s stock market dropped sharply on Wednesday, as authorities moved to limit travel between the territory and mainland China.

The Hang Seng (^HSI) stock market fell by 3% overnight. It was the first trading session since last Thursday, with markets closed for Lunar New Year. Investors were responding to fears about the economic impact of coronavirus on Hong Kong.

“Regrettably, the coronavirus will prolong Hong Kong’s recession caused by the political protests,” analysts at investment bank Jefferies wrote in a note on Wednesday. “It will inevitably lead to a rise in bankruptcies given the importance of the Chinese New Year for the hotel and hospitality sector.”

The warning came as Hong Kong authorities suspended high-speed trains and reduced ferries and flights to mainland China in a bid to stop the spread of the disease.

Authorities said on Wednesday the death toll from coronavirus in mainland China has risen to 132 and around 6,000 people have been confirmed as infected.

READ MORE: How coronavirus outbreak is hitting companies around the world

The continued lockdown of parts of China and Hong Kong is stoking fears about the possible economic impact of the outbreak. China is the world’s second largest economy and is a large contributor to global GDP growth.

“Downside risks to the Chinese economy are growing and a close watch should be kept on financial conditions,” Jefferies analysts wrote.

China’s Shanghai Composite remains closed as Chinese officials seek to contain the spread of the SARS-like coronavirus. Japan’s Nikkei (^N225) rose 0.7% overnight.

Despite continued fears in Asia, European stocks continued the mild rebound seen on Tuesday. The FTSE 100 (^FTSE) opened up 0.3%, France’s CAC 40 (^FCHI) was up 0.2%, and the DAX (^GDAXI) was up 0.1% in Germany.

Futures suggested a higher open for stocks in the US later today. S&P 500 futures (ES=F) were up 0.3%, Dow Jones Industrial Average futures (YM=F) were up 0.3%, and Nasdaq futures (NQ=F) were up 0.3%.