Outbreak seems out of control

The Wuhan pneumonia epidemic is spreading across provinces and regions

Deteriorating market concerns will weigh on China’s economic performance. In addition, Moody’s downgraded Hong Kong’s rating. The Hang Seng Index plunged 810 points or 2.8% yesterday to close at 27985 points.

· The confirmed cases of pneumonia in Wuhan are still rising under the Spring Festival

· In terms of Hong Kong stocks, we haven’t escaped the risk in the short term, and even if there is a rebound, the trend is still weak.

Worries over the pneumonia epidemic in Wuhan deepened, and Moody’s, an international rating agency, lowered Hong Kong’s rating. The market fell below the 28,000 mark due to internal and external pinch. Hong Kong stocks have not been out of danger for a short period of time.

Hong Kong stocks fell 3.7% for two days

Stock markets in the Asia-Pacific region were generally down yesterday. The MSCI Asia-Pacific Index posted its biggest decline in two weeks, with Hong Kong stocks leading the decline. After opening lower, the Hang Seng Index continued its downward trend and closed near the day’s low, closing at 27985 points, down 810 points or 2.8%, and falling 3.7% in two days. The H-Share Index also fell 361 points or 3.1% to close at 10970 points. The market turnover was 132.8 billion yuan, with more than 100 billion in 8 consecutive days. Blue-chip stocks fell across the board yesterday, with domestic insurance, aviation and gambling stocks falling significantly. Among domestic insurance stocks, China Life (02628) fell 5% and Ping An Insurance (02318) fell 4.3%; Wynn (01128) and MGM (02282) also fell 4.8% and 6.2%, respectively. In terms of A shares, the Shanghai Stock Exchange closed at 3052 points, down 43 points or 1.4%; the GEM Index fell from its 3-year high and fell 0.8% to 1967 points.

New-type coronavirus pneumonia in the Mainland is spreading across provinces and countries, causing market concern. The National Health and Medical Commission announced that there have been 291 cases of new-type coronavirus infections nationwide, including 270 cases in Hubei Province, including Wuhan. The market is concerned that if the epidemic situation spreads further, and outbound tourism or outbound consumption will decrease sharply, it may drag down domestic demand consumption and increase downward pressure on the economy. CICC said that the epidemic situation may increase the uncertainty of domestic economy and policies, and it may still be in the early stage of the epidemic situation.

As for Hong Kong, the local incident is continuing. The retail and tourism industries have been hit. Coupled with the outbreak in the Mainland, our economy will face a double blow. Furthermore, the international rating agency Moody’s downgraded Hong Kong’s rating from Aa2 to Aa3. As a result of internal and external concerns, if the outbreak in the Mainland worsens, the economic situation in China and Hong Kong will suffer, and the performance of the market will continue to be limited.

Epidemic weighs on Chinese New Year consumption

In the market outlook, investors can pay attention to two major concerns. One is the increase in the number of confirmed cases, which can be used to determine how well the epidemic is under control. As the Spring Festival is approaching, the risk of large-scale spread of the epidemic is higher, and the number of confirmed diagnoses is expected to continue to rise. In addition, the consumption growth rate of the Chinese New Year holiday slowed last year. The growth rate and the number of tourists were the lowest since 2005. Note whether this year ’s epidemic situation will set a new low and will slow down the economic performance of the Mainland.

Hong Kong stocks are plagued by the mainland epidemic in the short term, and adjustment pressure is high. The 27,400 districts are supported below. It should not be lost. The key support is the 26,500 level. In the medium term, factors such as the easing of the trade war and the continued easing of the global central bank are expected to boost Hong Kong stocks in the medium term.


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