Wuhan virus outbreak threatens to derail Hong Kong stock market in Year of the Rat
- First close of new year will be determined by how quickly the infection spreads or is contained, analyst says
- Strong market momentum will boost Hong Kong stocks, stockbrokers’ body says
Optimism in the Hong Kong stock market about the incoming Year of the Rat has been diluted by the Wuhan coronavirus outbreak, which will determine if the city’s stocks will make a “red debut” to the new year or not.
Whether the city’s benchmark Hang Seng Index closes on Wednesday, January 29, the first trading day in the Year of the Rat, higher than on the last trading day of the Year of the Pig on Friday – a red debut – will depend on how quickly the new infection spreads or is contained.
“The performance of the first trading day of the Year of the Rat next Wednesday will depend on the development of the Wuhan virus,” said Louis Tse Ming-kwong, managing director of VC Asset Management.
“If the outbreak becomes more severe over the next few days, during Lunar New Year, the market will go down further and a ‘black debut’ will be highly likely.
“However, if the situation is brought under control after the lockdown of Wuhan and nearby cities, and the spread of the disease is contained, the stock market might still be able to go up on Wednesday, for a red debut,” Tse said.
The Hang Seng Index closed the Year of the Pig at 27,949, down 41 points or 0.15 per cent. It performed better than in the previous year, the Year of the Dog, during which it dropped 10 per cent. The US-China trade war as well as the anti-government protests, now in their eighth month, contributed to many ups and downs over the year, with the index swinging by around 5,400 points in this period.