- Pharmaceuticals rise while Macau casinos, restaurant chains and airlines tumble
- Shanghai Composite falls 1.4 per cent to close at 3,052.14, its largest daily loss since November 11
Markets slumped across Asia on Tuesday, with Hong Kong stocks recording their biggest daily loss in more than five months, on deepening fears over the outbreak of a new pneumonia coronavirus in mainland China, as well as a downgrade in Hong Kong's rating by Moody's Investors Service.
The Hang Seng Index tumbled by 2.8 per cent, or 801.58 points, to close at 27,985.33, falling by the most in a day since August 5. In China, the Shanghai Composite Index fell 1.4 per cent to close at 3,052.14, its largest daily loss since November 11.
Elsewhere in Asia, the Nikkei 225 Index weakened 0.9 per cent, while South Korea's Kospi declined 1 per cent.
The sharp fall in Hong Kong and China stocks was a result of investors stepping up profit taking ahead of the Lunar New Year holiday, as concerns deepened over the outbreak of a new coronavirus strain, Kenny Wen, wealth management strategist at Hong Kong-based brokerage Everbright Sun Hung Kai, said.
"As Lunar New Year draws near, people are worried about the pneumonia situation and (are selling) shares faster to pocket gains," he said. "The public's attention towards the virus outbreak has increased significantly over the past 24 hours."
The Hang Seng Index had gained about 3,000 points " or 11 per cent " between a low on December 4 and a recent high on Friday.
This could be a healthy consolidation and represent buying opportunities for investors looking for a timing to catch up on the gains, according to Wen. The Hang Seng Index is unlikely to dip below 27,700 points, which is a firm support level, he said.
Chinese authorities on Tuesday confirmed a fourth person had died from the virus, while 15 medical staff in Wuhan city had also contracted the illness.
Meanwhile, a downgrade of Hong Kong's rating by credit rating agency Moody's on Monday night also weighed on blue-chip stocks in the city, which suffered heavy losses on Tuesday.
Chinese gaming giant Tencent Holdings plunged by 2.7 per cent to HK$385.4 and insurer AIA Group softened 3.4 per cent to HK$81.85, and were the biggest drags on the benchmark.
A number of sectors related to consumption and travel took a heavy beating over concerns about weak spending during Lunar New Year. They included airlines, restaurant chains, film producers, tourist attraction operators, the Macau casinos as well as supermarket owners.
State-owned Air China led the declines in airlines with a 5.9 per cent drop, after a Beijing newspaper called for airlines and rail operators to waive cancellation fees as part of efforts to combat the spreading disease.
Shopping malls will be affected the most by the outbreak of the pneumonia virus, while supermarkets and fast-food chains the least, according to a report by Jefferies consumer analysts Anne Ling and Kerith Chen published on Tuesday.
"Assuming Sars' impact in Hong Kong as the worse-case scenario, we note the following " high-traffic areas, or tourist centric stores, will be impacted. For example, cosmetic chains, shopping malls and restaurants," the analysts said, referring to the outbreak of the severe acute respiratory syndrome (Sars) in 2003.
Pharmaceuticals and makers of medical equipment such as surgical masks bucked the trend. In Hong Kong, Lijun International Pharmaceutical led the advance with a 5.4 per cent gain to HK$7.39.
In mainland China, a gauge tracking 254 drug makers rose 3.3 per cent, according to data provider Xuangubao. A total of 28 stocks jumped by the daily limit of 10 per cent, including antibiotics maker Shandong Lukang Pharmaceutical.
Wuhan Guide Infrared, a maker of infrared cameras and thermal imaging systems, soared by the 10 per cent daily limit after train stations and the airport in Wuhan city installed its equipment to identify passengers with symptoms of the illness.
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