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Nikkei Markets

Hong Kong shares slide to three-year low as virus fears mount

AIA and Swire Pacific skid after reporting annual results

HONG KONG (Nikkei Markets) -- Hong Kong shares slumped on Thursday on mounting fears over the spread of the new coronavirus, with the U.S. restricting travel from Europe and the World Health Organization labelling the outbreak a pandemic as cases outside China continued to multiply.

The Hang Seng Index shed 3.7% to 24,309.07, its lowest close since April, 2017. With Thursday's decline, the gauge's 14-day relative strength index, a measure of momentum, slipped below the threshold of 30 that some technical analysts consider to be a sign it may be oversold.

All 50 of the gauge's constituents ended lower. Pan-Asia insurer AIA Group slid 4.4% after reporting results for last year. The company said profit for 2019 more than doubled from a year ago, but warned that the coronavirus had caused "significant disruption in the group's new business sales in the first quarter from reduced face-to-face interactions."

Diversified conglomerate Swire Pacific shed 4.1% after reporting a 62% drop in 2019 profit.

Among heavyweights, social media and gaming major Tencent Holdings fell 3.9%, while London-headquartered lender HSBC Holdings lost 4.1%.

The coronavirus is now present in more than 110 countries across the world. The WHO's designation of the virus as a pandemic comes at a time when new cases have slowed in China, but escalated in the rest of the world. As of Wednesday, Italy had more than 12,000 cases and over 800 fatalities.

U.S. President Donald Trump on Wednesday night said he will significantly restrict travel from Europe to the U.S. for 30 days, effective Friday. Also on Wednesday, the National Basketball Association indefinitely suspended its season after a player tested positive for the virus. And Oscar-winning actor Tom Hanks said he and his wife, Rita Wilson, have been diagnosed with the coronavirus while they were in Australia.

While sentiment resembled a situation of "panic," the market is "likely to see a technical rebound anytime now," given significant recent losses, said Louie Shum, chief executive at Sincere Securities. Policy support and containment of the pandemic were key to push the market higher, he said.

Meanwhile, market participants are expecting the European Central Bank to announce stimulus measures at its meeting on Thursday, while the U.S. Federal Reserve is expected to cut interest rates again next week, on top of a reduction last week.

In the mainland, the Shanghai Composite Index declined 1.5%, while the yuan traded onshore slipped 0.3% against the dollar to 6.98.

China Resources Power fell 4.4% in Hong Kong after it reported a 13.6% decline in net power generation during February.

Guorui Properties slid 5.8% after the property developer reported an 86% plunge in February contracted sales.

Coal miner China Qinfa Group slumped 10.7% after saying it expects to report 2019 profit of at least 70 million yuan ($10 million) down from 1.5 billion yuan a year ago.

Metal recycling company Chiho Environmental slid 8.9% after saying it expects to report a loss for 2019, compared with a profit of 401.2 million Hong Kong dollars ($51.6 million) a year ago.

-- Benny Kung

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