Japan’s Nikkei suffers huge loss due to China’s coronavirus outbreak

Published on : Tuesday, January 28, 2020

Japan’s stock market index Nikkei posted its biggest one-day loss in five months on Monday, with tourism-related stocks under pressure amid fears that a virus outbreak in China could be more deadly and harder to contain than initially thought.

The Nikkei share average slumped 2.03 per cent, its biggest percentage fall since Aug. 26, to end at 23,343.51 points, the lowest finish since Jan. 8. The broader Topix lost 1.61 per cent to 1,702.57.

China extended its Lunar New Year holiday and more big businesses shut down and told staff to work from home in a bid to contain the spread of the disease as the death toll rose to 81.

“While we can’t tell how much the disease will spread, one thing we can say for sure now is that consumption in China is already taking a hit as Beijing tries to contain the epidemic,” said Hiroyuki Ueno, senior strategist at Sumitomo Mitsui Trust Asset Management.

The Chinese government had barred outbound packaged tour travel for Chinese travellers, denting shares of Japanese companies that have benefited from a rising influx of Chinese tourists.

Topix airline shares subindex fell 3.4 per cent to their lowest since May 2017, with ANA Holdings and Japan Airlines falling three per cent and 3.9 per cent respectively.

Shares of Oriental Land dropped 7.8 per cent, the biggest fall in five years, following a Nikkei report that the operator of Tokyo Disney Resort is likely to post its first fall in profit in three years in the nine months ended December.

Travel and leisure firm H.I.S. fell 6.8 per cent, while Keisei Electric Railway, which runs trains to Tokyo’s Narita Airport from the city centre, shed as much as 6.2 per cent, largest loss in three-and-a-half years for the usually defensive stocks.