Beijing: China’s financial markets will remain shuttered until Feb. 3 due to Coronavirus fears, according to announcements from the Shanghai and Shenzhen exchanges.
Death toll reaches 106
The move comes with the outbreak of the deadly Coronavirus claiming more than 100 lives in China. Stocks tumbled as oil trade entered bear market on Monday, leaving investors around the globe worried with many fearing it may lead to a global recession.
The Chinese government is trying to delay panic selling until it can get the massive outbreak under control. But this strategy is unlikely to work because of the sheer impact the virus is already having on the nation’s economy. Investors can expect to see a large correction in the Chinese indices when (and if) trading resumes next Monday.
The impact of this crisis may bleed into American markets and may trigger a stock market correction.
In response to the crisis, China has decided to extend the Lunar New Year break on trading by four days. This looks to be an attempt to prevent panic selling due to the outbreak. However, the Feb. 3rd date for a resumption of trading may be delayed because Shanghai authorities have separately advised companies not to resume work until at least Feb. 9th. The U.S listed China Large-Cap ETF (NYSEARCA:FXI) dropped 4% on Monday.
Economic Downturn?
Investors should also watch for the market fallout over a recent missile strike against the United States’ embassy in Iraq. That situation, along with the ongoing crisis in China, could put pressure on equity prices going forward. With all these black swans hitting the market at once, there’s a growing fear that a major economic downturn is around the corner.