HONG kong – Almost every stock fell in Hong Kong as trading reopened on Wednesday (Jan 29) for the first time this week.
Other Asian markets rose as better-than-expected Apple earnings drove some regional tech gains although broader confidence was capped by worries about the economic impact of China's virus outbreak.
The Hang Seng Index and a gauge of Hong Kong-listed Chinese companies slumped more than 2 per cent, with landlords, travel and casino stocks among the biggest decliners.
Limiting losses in the city was a rebound in US markets overnight, which also triggered a 1.5 per cent gain in FTSE China A50 Index futures. The contracts had lost more than 6 per cent in Singapore since Friday, while the offshore yuan had slid 0.5 per cent to approach 7 per US dollar.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 per cent, ending four days of losses. Australian shares rose 0.41 per cent, while Japan's Nikkei stock index rose 0.27 per cent.
Singapore's Straits Times Index edged up 5.41 points or 0.17 per cent to 3,186.66 as of 10:27am.
While China's flu-like illness, which has killed more than 100, continues to keep markets on edge, there were signs investors see the recent rout in asset prices as overdone.
Long-term US Treasury yields traded above short-term yields and the Japanese yen nursed losses as investors pulled back from safe-havens in favour of more risky assets like equities.
Oil futures extended gains in Asia as pessimism about the virus eased somewhat and after Opec sources said the cartel wants to extend crude output cuts by three months to June, easing concern about excess supplies.
Other investors say the growing number of travel restrictions within China and the cancellation of international flights could prevent a significant worsening of the virus.
“The rise in Treasury yields shows the risk-off trade is falling out of favour,” said Kiyoshi Ishigane, chief fund manager at Mitsubishi UFJ Kokusai Asset Management Co in Tokyo.
“This is supportive of Japanese stocks. You can buy Asian shares too, but I would not get too aggressive while Chinese markets are closed.”
After the market close, Apple reported better-than-expected profits for the fourth quarter and forecast revenue in the current quarter above Wall Street expectations.
In Hong Kong, traders had been off their desks since midday, before reported cases of the coronavirus surged globally and the number of confirmed deaths in China rose by more than threefold.
“The unpredictability part is the key source of stress in the market,” said Tommy Xie, an economist at Oversea-Chinese banking Corp. “The next few days to early February will be critical. If we are able to keep cases outside Hubei province low, this means the city lockdown works and may help alleviate the concern.”
Travel and consumer-related stocks were among the worst hit in Hong Kong as people in China increasingly stay at home during what is usually a peak spending period. Macau casinos Galaxy Entertainment Group and Sands China fell at least 5.8 per cent after China said it will stop issuing travel permits for mainland citizens to visit the city. Cathay Pacific Airways lost 3.3 per cent.
Financial markets in China will reopen on Monday (Feb 3) after the central government extended the Lunar New Year holidays in the mainland. China pledged to provide abundant liquidity for money markets and urged investors to evaluate the impact of the coronavirus objectively. Almost 6,000 people have been infected in China, and at least 132 have died.
“We expected to see strong economic momentum in China before, but now the pace of growth may slow,” said Banny Lam, managing director and head of research at CEB International Investment in Hong Kong. “Markets will remain very volatile due to the uncertainty, and the swings won't subside until we have clear evidence that the virus is fading. That may happen when the weather gets warmer in the summer.”