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Nikkei Markets

Hong Kong shares hit seven-week low as Wuhan coronavirus spreads

All Hang Seng Index constituents drop as markets open after long weekend

HONG KONG (Nikkei Markets) -- Hong Kong shares slumped on Wednesday as markets reopened after the Lunar New Year break to deepening fears over the spread of a novel coronavirus after China reported a spike in cases.

The Hang Seng Index slid 2.8% to 27,160.63, its lowest close since Dec. 12. All of the index's 50 constituents ended lower. Hong Kong developer Hang Lung Properties led percentage losses on the index, sliding 6.7%. Casino operators Galaxy Entertainment Group and Sands China fell 5.2% and 5.6%, respectively, as visitors to Macao declined during the holiday due to the virus outbreak.

Wednesday marked the first trading day in Hong Kong this week after the Lunar New Year break. The Hang Seng Index slid 3.8% last week as risk sentiment weakened after China reported more cases of the virus that causes pneumonialike symptoms and said it could spread from person to person. Authorities on Wednesday said the death toll had risen to 132, and there were about 6,000 confirmed cases. The virus has been detected in people around the world who had either traveled to Wuhan or come into contact with someone who has.

China extended its Lunar New Year holiday in an attempt to stem the spread of the virus. The Shanghai stock market will resume trading on Monday instead of Friday.

Meanwhile, governments across the world restricted travel to China and airlines cut the number of flights to the country. Several countries are working to evacuate their citizens from the central Chinese city of Wuhan, where the virus originated. Hong Kong on Tuesday said it will impose limits on travel from China into the city effective Thursday, closing some border checkpoints and curbing flights from the mainland. The city will also suspend high-speed rail and ferry links between Hong Kong and China.

"Chances are that the Hang Seng Index has touched a bottom today," said Alan Li, portfolio manager at Atta Capital. "While the impact on the real economy will slowly surface, the stock market won't be necessarily pessimistic because people are expecting further monetary easing in China."

The outbreak comes at a time when China's growth slowdown has been showing signs of bottoming out after a monthslong bruising trade war with the U.S. took a toll on Asia's largest economy.

Morgan Stanley said that while the virus had led to a suspension in economic activity and was imposing near-term pressures on global and economic growth, the impact was likely to be transitory and expectations of recovery remain intact beyond the first quarter.

Shares of Chinese airlines declined, with Air China sliding 2.8% and China Southern Airlines shedding 3.7%.

Retail stocks in Hong Kong also fell as sales are expected to take a hit with people likely to stay away from shopping centers and crowded areas. Cosmetics retailer Sa Sa International Holdings dropped 9.1%, while Chow Tai Fook Jewellery Group slumped 8.1%.

Fosun Tourism Group shed 5.7% after saying revenue from its China resorts and destinations and tourism-related services would be significantly affected by the coronavirus outbreak.

Apparel maker Giordano International plunged 9.8% after saying it expects profit for the year ended Dec. 31 to have decreased 50% year-over-year.

Restaurant operator Ajisen (China) Holdings slid 7.6% following a forecast for a 50% to 70% decline in 2019 profit.

Handbag maker Sitoy Group Holdings, which said it expects profit for the year ended Dec. 31 to have decreased 55% to 65% from a year ago, fell 7.7%.

-- Benny Kung

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