China counts economic cost of virus as markets plunge, death toll up

Investors worried about the spread of the coronavirus wiped more than $400 billion off the value of China’s stocks in the first trading session on Monday after an extended Lunar New Year break while the death toll from the epidemic rose to 361.

Markets plunged at the open in their first session since January 23, when the outbreak of the newly identified virus had claimed only 17 lives in Wuhan city, the epicentre of the outbreak, in the central province of Hubei.

Since then, the flu-like virus has been declared a global emergency and spread to more than two dozen other countries and regions, with the first death outside of China reported on Sunday, that of a 44-year-old Chinese man who died in the Philippines after traveling from Wuhan.

The number of deaths in China rose to 361 as of Sunday, up 57 from the previous day, the National Health Commission said. The number of new confirmed infections in China rose by 2,829, bringing the total to 17,205.

Jittery investors erased $420 billion from Chinese stocks, with the Shanghai Composite index shedding eight percent to hit a one-year low, according to Reuters calculations.

The yuan began trade onshore at its weakest level this year. Iron, oil and copper traded in Shanghai all dropped by their daily limits, catching up with global price falls as the spread of the virus has weighed on the world’s growth outlook.

Investors were bracing for volatility when onshore trade in Chinese stocks, bonds, yuan and commodities resumed, following a steep global selldown on fears about the impact of the virus on the world’s second-biggest economy.

Looking to head off panic, China’s central bank injected 1.2 trillion yuan ($173.8 billion) of liquidity into the markets via reverse repo operations on Monday.

Beijing also said it would help firms that produce vital goods resume work as soon as possible, state broadcaster CCTV reported.

China’s Sinopec Corp, Asia’s largest refiner, said it would cut refinery output this month by about 600,000 barrels a day, roughly 12 percent of the average daily output last year, as health worries hit fuel demand, four people with knowledge of the matter said.

But while stock markets reopened, most provinces have extended the Lunar New Year holiday to try to contain the virus, with workers in Hubei not scheduled to return to their jobs until after February 13.

Wuhan and other cities remain in virtual lockdown with travel severely restricted, and China is facing mounting international isolation as well due to restrictions on flights to and from the country.

At least another 171 cases have been reported in more than two dozen other countries and regions, including the United States, Japan, Thailand, Hong Kong and Britain.

The World Health Organisation has declared the outbreak a public health emergency of international concern but said global trade and travel restrictions are not needed.

CHINA OPENS FAST-BUILT HOSPITAL

A hospital built in just eight days to treat people with the virus in Wuhan will begin to take patients on Monday, state media said.

The hospital called Huoshenshan, or “fire-god mountain”, will have 1,000 beds. More than 7,500 workers took part in the project, launched on January 25 and finished this weekend.

China is building a second hospital in Wuhan with 1,600 beds. Leishenshan, or “thunder-god mountain”, is scheduled to be completed on Feb 5.

While countries have been trying to block the virus with travel bans, they have also been trying to get their stranded citizens out of locked-down Wuhan.

The United States, which flew people out last week, planned “a handful more flights”, Secretary of State Mike Pompeo said.

Russia would start evacuating its citizens from Wuhan on Monday and it has also suspended direct passenger trains links with China.

Australia evacuated 243 people, many of them children, from Wuhan on Monday and will quarantine them on a remote island in the Indian Ocean off its northwest coast.

Australia on Saturday followed the United States in barring entry to all foreign nationals travelling from mainland China.

The Group of Seven industrialised democracies are trying to find a common approach for dealing with the fast-spreading new coronavirus, German Health Minister Jens Spahn said on Sunday.

The virus is thought to have emerged late last year in a Wuhan market illegally trading wildlife. It can cause pneumonia and spreads between people in droplets from coughs and sneezes.

It has created alarm because it is spreading quickly and there are still important unknowns surrounding it, such as its death rate and whether it is able to spread before any symptoms show.

The number of deaths in China has now passed the total Chinese toll from the 2002-03 outbreak of Severe Acute Respiratory Syndrome (SARS), another coronavirus that emerged from China and killed almost 800 people around the world.

Even so, Chinese data on the numbers of infections and deaths suggests the new coronavirus is less deadly than SARS, although such numbers can evolve rapidly.