03 February 2020
Monday morning in China began with a sharp drop in prices of such unfavourable movements related to the fact that financial markets react nervously to the news of the spread of coronavirus. It all started with the fact that the index of the Shenzhen stock exchange SZSE Component index and Shanghai Composite index of Shanghai at the opening fell to 8%, this was indicated in the bidding data.
The event is not caught anyone by surprise, as analysts initially predicted that the financial markets will be influenced by news about the spread of the coronavirus mutated and a new type of negative effect applied by the Chinese authorities of measures to save the economy.
Experts interested in another question, they are concerned that due to the low economic activity, demand for oil will fall. This happened because quotes of “black gold” has already managed to fall in early trading on Monday. Trading according to 05.50 Moscow time the price of oil North sea Brent crude was down percent to 56.09 USD per barrel, and the barrel zapadnotekhasskaya oil WTI fell by this time by 0.6% to USD 51,27.
Meanwhile, the hype from the Chinese coronavirus the US dollar on the first working day of the new week went up. It is logical that the parties do not want to keep unreliable assets and translate them into a reliable currency. Already by 07:00 Moscow time the single European currency fell 0.09% to 1,1082 USD. The index of the dollar against a basket of major currencies by this time has grown on 0,12%, to 97,325 points.
The President of the Beijing investment company WanDeFu Whether Suwa said, “it is very difficult to trade stocks. It is impossible to predict how the disease will develop. Even the experts do not have a clear idea, when the outbreak of the virus, not to mention stock traders”. It is worth noting that the drop in prices on the stock exchanges of mainland China on 3 February was a record in 2015.
The authorities of China “all under control”, as they say. Their policy of the party aimed at preventing panic sales by maintaining liquidity in the money market and appeal for calm. However, this makes little sense. This week two thirds of the Chinese economy remain closed, the public is concerned about the growing number of deaths from the coronavirus and efforts by China to contain it, which leads to a significant outflow of investors.
Managing Director of Shanghai WuSheng Investment Management Partnership Fang Rui said “You can't blame people that they “go” in the cash when they feel that their health is in danger.”