China stocks suffer worst quarter since 2018

  • Markets
  • Tuesday, 31 Mar 2020

The impact of the fast-spreading coronavirus dragged the Shanghai benchmark 4.5% lower this month and 9.8% in the first quarter.

HONG KONG/SHANGHAI: Chinese shares edged up on Tuesday after the country reported a better-than-expected industrial activity, though fears of an economic fallout of the coronavirus pandemic led the stock market to its worst quarter since 2018.

The Shanghai Composite index closed 0.1% firmer at 2,750.30 and the blue-chip CSI300 index added 0.3% on hopes that the world's second-largest economy may soon recover from the initial shock caused by the outbreak.

The impact of the fast-spreading coronavirus dragged the Shanghai benchmark 4.5% lower this month and 9.8% in the first quarter, while the CSI300 dropped 6.4% month-on-month and 10% for the quarter. ** Both benchmarks marked their worst months since last May, and worst quarters since the fourth quarter of 2018.

CSI300's financial sector sub-index fell 0.8%, the consumer staples sector jumped 3.9%, the real estate index dropped 1.3% and the healthcare sub-index gained 1.4%. ** The smaller Shenzhen index added 0.5% and the start-up board ChiNext Composite index was higher by 0.6%.

Factory activity in China unexpectedly expanded in March from a collapse the month before, but analysts caution that a durable near-term recovery is far from assured as the global coronavirus crisis knocks foreign demand and threatens a steep economic slump.

The pandemic is expected to sharply slow growth in developing economies in East Asia and the Pacific as well as China, the World Bank said in an economic update on Monday

"While domestic work and production are resuming, reducing the financing cost will be critical to the economy's recovery," eToro's analysts said in a note.

Analysts added that A-shares' muted reaction to a surprise interest rate cut on Monday "shows that investors are looking for more powerful stimulus policies and if it's absent, the market will continue to hover at a lower level."

Mainland China reported on Tuesday a rise in new confirmed coronavirus cases, reversing four days of declines, due to an uptick in infections involving travellers arriving from overseas.

Around the region, MSCI's Asia ex-Japan stock index was firmer by 1.1%, while Japan's Nikkei index closed down 0.9%. ** At 0729 GMT, the yuan was 0.11% firmer at 7.0897 per U.S. dollar.

So far this year, the Shanghai stock index lost 9.8% and the CSI300 dropped 10%. About 21.86 billion shares were traded on the Shanghai exchange. The volume in the previous trading session was 23.97 billion. The Shanghai stock index is below its 50-day moving average and 200-day moving average. - Reuters

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