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Shanghai tanks on virus fears to lead fresh Asia market retreat

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AFP Hong Kong
Last Updated : Feb 03 2020 | 1:30 PM IST

Chinese equities plunged almost eight per cent on Monday as nervous traders returned from their extended Lunar New Year break, hit by fears that the coronavirus, which has killed more people than SARS, could hammer the country's economy.

The steep losses led another sell-off across Asia following a painful week for global markets with the virus death toll topping 360 people and more than 17,000 infected, and governments around the world banning flights to and from China.

Analysts have warned the outbreak could slash global growth this year, throwing a spanner in the works just as economies were showing signs of stabilising after more than a year of slowing.

Observers said with China being a crucial part of the global trade infrastructure, other countries would also be badly hit, while major corporate names have frozen or scaled back their Chinese operations, threatening the global supply chain.

The World Health Organisation invoked a global health emergency last week but stopped short of recommending trade and travel restrictions that could have had a bruising effect on China.

"The situation is terrible and China's economy will be dealt a bad blow," said Stephen Innes at AxiCorp.

"As will (Association of Southeast Asian Nations) countries that have built significant trade ties with China, even more so those countries that are tourist destination spots and service providers to Chinese tourists. They will be dealt the nastiest blow of all."
"That said, we still believe that economic activities should recover swiftly once the number of new cases comes under control, and subsequently market sentiment should also improve. This could take time to play out, but this underpins our long-term optimism in the A-share market despite a challenging time ahead."

Disclaimer: No Business Standard Journalist was involved in creation of this content

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First Published: Feb 03 2020 | 1:30 PM IST

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