The pneumonia outbreak in the Hubei provincial capital of Wuhan, which has already claimed four lives, has halted the upward momentum of major stocks in Mainland China and Hong Kong this week. Stock traders were more cautious with their positions on Monday, breaking the pace of stock rally.
News of the viral outbreak in China over the weekend by the Chinese government seemingly halted the ramp-up of major stocks this week. Most of the stocks that were affected included those that are involved in industries such as travel, tourism, hotels, theme parks, restaurants, and airlines. Similar to what had happened more than 17 years ago, companies in these industries saw their profits slowly dwindle as travelers cancel their plans.
Over the weekend, Chinese officials confirmed that the cases involving the unknown coronavirus infection have ballooned to more than 100 from just a couple of cases last week. Experts have determined that the virus is somewhat related to the virus that caused the 2003 SARS epidemic in Asia.
In Mainland China, the A-Share Index in Shanghai fell by 1.4 percent on Monday, while the same index in Shenzhen dropped by 1.3 percent. In Hong Kong, the city's benchmark stock index dropped by as much as 2.8 percent on Tuesday, making its biggest intraday decline since November.
Market experts have stated that the slight decline in the stocks is likely just a "knee-jerk reaction" to the news of the viral epidemic. However, some believe that the effects could become long-term depending on how the situation will play out.
Airline stocks were the most affected by the news over the weekend. The government has already issued a travel advisory, while at the same time ramping up inspection measures at airports nationwide. With the Lunar New Year Holiday approaching, more than 3 billion trips could be affected.
Shares of China's largest carrier Air China plunged in both Hong Kong and Shanghai. State-owned carriers China Southern and China Eastern also saw their share drop this week.
According to the latest findings, the unknown virus, which has been named the 2019-nCov virus, had originated from a local wet market in the central city of Wuhan. The exact source of the virus has yet to be determined as the market itself had been selling a number of live animals from chickens to live snakes. Over the weekend, a total of 198 cases were reported, with four people ultimately succumbing to the deadly symptoms. Out of the 198 cases, two were confirmed in shanghai, while eight were reported in Shenzhen.
