“Investors are sensitive to any little movement and amplify the effect now. That’s why the market is staying volatile,” said Alan Li, portfolio manager at Atta Capital.

The Hang Seng Index ended a teensy bit down by 0.03 per cent at 26,377, giving up bigger morning gains. Of the 50 members on the benchmark, 29 closed with gains.

The Shanghai Composite Index added 0.7 per cent to 2,992.90, after climbing up as much as 1.9 per cent during the day.

In Hong Kong, online healthcare platform Ping An Good Doctor advanced 0.8 per cent to HK$76.45. That was a pullback from its 5.4 per cent morning gain.

Index heavyweight Tencent gained 1.1 per cent to HK$394.

In China, Kweichow Moutai jumped 2.5 per cent to 1,113 yuan. Meanwhile, Apple AirPod supplier Luxshare Precision Industry fell 1 per cent to 48.1 yuan.

Asia markets were mixed. European stocks gained, as did US futures, with hopes on the G-7 call tonight outweighing concerns.

Worries about the spreading disease that has killed more than 3,000 people roiled stock markets around the globe last week.

“The Hang Seng Index has much more momentum to go up,” said Louis Tse, managing director at VC Asset Management.

Traders are seeing Hong Kong and China markets as safe bets as efforts to contain the spread of the coronavirus have seen good results. That gave them confidence to buy in again, Tse said.

Stocks, sectors to watch

For long-term investments, Tse likes tech and online stocks with strong fundamentals.

He pointed out ZhongAn Online, an online insurance provider, which was up 5.1 per cent to HK$35.1.

He also favours AliHealth and face-editing app Meitu.

Chinese airline stocks are ones to look at, said Luya You, analyst at Bocom International.

The industry will inevitably bounce back very strongly because the fundamentals of operating in the sector have not changed and the coronavirus is only a temporary hit to tourism, You said.

“If the overall domestic economy holds somewhat stable and steady in the second half of the year, travel demand will tend to bounce back,” You said.

Aviation is very sensitive and volatile, and those looking to invest in airline stocks need to be ready for volatility, she said.

China Southern Air, China Eastern and Air China, China’s big three airlines, are heavily “buy” rated by analysts tracked by Bloomberg.

Kenny Wen, wealth management strategist at Everbright Sun Hung Kai, likes IT stocks, including Alibaba, Tencent and Meituan Dianping, and 5G-related stocks.

“Aggressive investors may try to capture the short-term opportunities,” Wen said. “We expect HSI next resistant level [for the Hang Seng] will be 27,000.”

Global market response to stimulus

Global markets have underestimated the rapid spread of coronavirus to other countries, which has led to jittery markets, said Iris Pang, Greater China chief economist at ING Bank.

“The stimulus in mainland China is enough. And [authorities] are rolling out more almost day by day. This is not something to worry about,” said Pang.

However, G-7 countries might be worried because their fiscal conditions are not as ample as China’s, Pang said, adding that developed markets may struggle to do something proportionate to what the Chinese government has done.

She is still hopeful that the US may be looking to cut rates, while the European Central Bank and smaller nations in Southeast Asia could extend repayment due dates to offset the economic impacts of the coronavirus outbreak.

“More effective measures include extending the repayment due date, which is more important for corporates and individuals [at a time when] there is no business activities and revenues at all, and they can’t really generate cash flows,” she said.

Markets mixed in Asia

Tokyo’s Nikkei 225 ended 1.2 per cent lower, after climbing as high as 1.8 per cent during the day.

The Bank of Japan on Tuesday morning said it will inject 500 billion yen of liquidity into its financial markets through unscheduled debt-buying operations.

Seoul’s Kospi index was up 0.6 per cent while the technology-heavy Kosdaq index shed 0.1 per cent.

In Australia, the S&P/ASX 200 ended 0.7 per cent higher, after the country’s central bank cut interest rates by 25 basis points, to a record low of 0.5 per cent.

Malaysia’s Bank Negara cut interest rates by 25 basis points to 2.5 per cent, the lowest level since July 2010. The policy easing came after last week’s 20 billion ringgit (US$4.8 billion) fiscal stimulus package to offset the coronavirus outbreak impact.

The FTSE Bursa Malaysia KLCI ended 0.8 per cent higher as the announcement was made in late afternoon trading.

“Expected rate cuts and stimulus efforts have excited animal spirits in Hong Kong and China as markets rally,” Brock Silvers, managing director at Adamas Asset Management, said of the big morning gains.

However, equities were troubled even before the coronavirus and are plagued by China’s worst GDP data in decades, on top of Hong Kong’s growing social instability, Silvers warned.

“This week’s PMI data revealed [the coronavirus’] ongoing havoc, and global supply chains have begun diversifying away from China. Increased credit and new infrastructure programmes aren’t going to solve those issues,” Silvers said.