Chinese investors ruined stock market after returning from vacation
The Chinese stock exchange index CSI 300, which takes into account 300 companies, decreased by 9.1%, the value of most securities fell by more than 10%, the national currency of China lost 1%, as Forbes magazine reports citing Bloomberg.
The stock markets have not yet seen such a sale of shares. Crude oil futures lost 7%, iron ore – 6.5%, ferrous metals – 6%. Many assets fell to the permitted daily level. Securities of PetroChina&Co plunged in value by almost 10%, a similar situation occurred with Jiangxi Copper&Co.
Fang Ryu, the manager of Shanghai WuSeng Investment Management Partnership, explained that investors returned from the holidays and many of them need money, especially when their health is in danger.
The Chinese government has provided liquidity to more than a trillion yuan to reduce market pressure. The People’s Bank cut the refinancing rate by ten points. Officials urge investors not to panic and objectively evaluate the situation.
What will be the reaction of the Russian market?
The sharpest drop experienced the Shanghai Composite Index, which lost $370 billion in capitalization. Other Asian exchanges also weakened their positions, but not so much. Japan’s Nikkei NIK index lost 1.1%, Kospi from South Korea fell for 0.11%, Taiwan’s index – 1.56, Singapore’s STI index dropped for 1%. The cost of oil has lost about 1%.
According to the results for the end of Friday, the value fell to annual lows.
The situation happened can be considered as the result of a panic, says Isaac Becker, an analyst at FCP Financial Management Ltd. He is confident that a wave of decline will affect other markets, but not so significantly.
The stock markets of Russia, Europe and the United States have already reached some of the decline due to the fear of the coronavirus, says Alexander Losev, CEO of Sputnik company. He also noted that a significant plummet occurred during the Chinese holidays, so the rest of the countries have already recovered. Losev said that the Russian market has little effect on changes in Asia.
He believes that there will be no significant correction against the spread of coronavirus. Typically, panic due to such circumstances lasts no more than a quarter, and for a crisis to occur, at least two quarters of a recession should pass.
The consequences of the viral shedding will be comparable to the trade war, as the main problems arise due to the cancellation of supplies and services.