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Nikkei Markets

Hong Kong shares skid as coronavirus fears grip market

MTR declines after reporting drop in 2019 profit

HONG KONG (Nikkei Markets) -- Hong Kong shares slumped on Friday, as worries over the spread of the new coronavirus dampened sentiment after indexes on Wall Street retreated overnight.

The Hang Seng Index fell 2.2% to 26,193.43 by noon. Social media and gaming major Tencent Holdings slid 2.2%, while financial heavyweights AIA Group and China Construction Bank each were down 2.5%.

Hong Kong rail operator MTR declined 1.7% following a 25.5% drop in 2019 profit as political unrest in the city hurt operations. MTR said the impact of the coronavirus on its operations will likely continue for some time.

Indexes on Wall Street pulled back overnight as global market sentiment remains dominated by concerns over the impact of the coronavirus on the world economy. The outbreak, which originated in the central Chinese city of Wuhan late last year, continues to spread. Total confirmed cases were near 98,000 as of Thursday, with over 3,300 fatalities. While most cases are in China and within Hubei Province, the infection has spread to the U.S., Europe, parts of the Middle East and Australia.

Financial markets have been choppy in recent days even as major central banks have pledged support, with all three U.S. equity indexes alternating between sharp gains and losses in March. The U.S. Federal Reserve earlier this week delivered an unexpected 50-basis-point rate cut.

"The epidemic is still at a worsening stage," said Tracy Chan, an analyst at KGI Asia. "Investor sentiment is still not stable."

Chan does not expect the Hang Seng Index to rise above 27,000 in the near-term, even with policy support. "We are seeing range bound volatility. We think it will be like this for now unless the epidemic shows clear signs of being tamed."

In the mainland, the Shanghai Composite Index fell 1%.

Sunac China Holdings lost 3.6% in Hong Kong after the developer reported a 33% drop in February contracted sales.

China Overseas Land & Investment slipped 2.2% following a 40% plunge in contracted sales for last month.

Yuzhou Properties declined 2.5% after reporting a 61% drop in February sales.

China Overseas Grand Oceans fell 3.7% after saying contracted sales in February more than halved from a year ago to 1.15 billion yuan ($165.7 million).

Electronics company VTech Holdings slipped 2.5% after saying it expects revenue for the year ending March 31 to be at similar levels to a year ago. The estimate was lower than previous expectations, the company said, citing lower production capacity due to the coronavirus outbreak.

-- Benny Kung

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