As the scale of 2019-nCoV spread grows, investors are adjusting their portfolios.
The bear market in China is just getting started. Image credit: Ningyu He/Unsplash
While the growing official numbers of the outbreak victims are fueling the media craze, many investors are selling China-related equity. The global markets have been sliding down on the news, with gold – a renowned safe harbor when it comes to 'black swan' events – starting another rally.
Alibaba Group (BABA:NYSE), which peaked at USD 230.48 per share on January 13, went down significantly, closing at USD 205.47 on January 27.
JD.com (JD:NASDAQ), another e-commerce juggernaut that has been performing slightly better, seeing its shares drop from USD 40.31 to USD 37.65 apiece over the same period.
Pinduoduo (PDD:NASDAQ), a low-end challenger of the abovementioned two, lost 7.2% of its value over the last week.
Baidu (BIDU:NASDAQ), one of 2019’s biggest stock market disappointments – that, however, started recovering in December – slumped again, hitting USD 126.28 on January 27.
Not to mention Trip.com (TCOM:NASDAQ), the main beneficiary of China’s burgeoning tourism sector, which lost nearly one-fifth of its market cap over the past five trading days.
It is noteworthy that the prolonged quarantine might benefit e-commerce companies as more people stay home and shop online. The same can be said about digital entertainment giants such as Tencent (0700:HK) and food delivery companies like Meituan Dianping (3690:HK). At the same time, the epidemic is severely damaging several other industries, including logistics, transportation and, as Trip.com’s case shows, tourism.
Before the Lunar New Year Holidays, the country’s investors managed to show how bearish they were, with CSI 300 index tumbling by 3.1% on January 23; most of the tech stocks on China’s new Nasdaq-style board fell as well.
Meanwhile, operation of the key mainland marketplaces – the Shanghai and Shenzhen exchanges – has also been affected by the outbreak: the two are now set to resume trading on February 3. As for the Hong Kong bourse, it is expected to start facilitating transactions on January 29.