The Lunar New Year is approaching in China. The celebration period is observed with a lot of traveling and consumer spending. That brings cash influx to local businesses. But this year, Chinese analysts fear the pneumonia outbreak will cause the holiday season’s collapse. People will prefer to stay at home rather than risk illness. That means that airlines, casinos, and film producers won’t be able to sell their products, and their profit will reduce significantly.
The virus’s outbreak began in central China, and this week it entered a more severe phase. The infection spread to medical workers. The virus is more contagious than doctors thought in the beginning. Meanwhile, Chines futures began declining. Chen Shi, Shanghai Jade Stone Investment Management’s fund manager, noted that it’s not easy to calculate how much of a downside this would be. According to Shi, Investors tend to overreact. Meanwhile, lowered prices create a good opportunity to buy.
Northbound Stock Links with Hong Kong Will Shut Down for Five Trading Days
Foreigners have sold a net 6.7 billion yuan ($971 million) of mainland-listed shares as of 2:00 p.m. local time. As they had been buying for months before selling, this step caused an uproar on the stock market and wavered local investors’ confidence.
Chinese stocks were skyrocketing after Beijing signed a phase one trade deal with the U.S. All data signaled that China’s economy was stabilizing. Shanghai Composite Index has gained nearly 8% since November. Chinese investors lifted their futures almost to 1.04 trillion yuan to chase the rally.
But due to the recent decline in the market, topped by the spreading virus, people are getting nervous and cashing out. Wang Chen, a Shanghai-based partner with XuFunds Investment Management Co., admitted that the outflows via the northbound links and upcoming earnings season are also adding to caution.