JSE subdued as China stocks plunge

The JSE was little changed on Monday morning amid Shanghai’s composite index plunging as the coronavirus outbreak continues to weigh on the economic outlook of the world’s second-largest economy.

Shanghai’s Composite index fell near 8% earlier as trading resumed in mainland China after the extended Lunar New Year holiday. This was the biggest daily fall for that index in more than four years.

“There seems to be an appreciation now that even the best-case scenario for the coronavirus isn’t good,” said London Capital Group head of research Jasper Lawler in a note.

Shanghai-traded oil, iron ore, copper and soft commodities contracts all posted sharp drops, catching up with sliding global prices, Reuters reported. The new virus has created alarm because it is spreading quickly, much about it is unknown, and authorities’ drastic response is likely to drag on economic growth.

Earlier, the Shanghai Composite was down 7.72%, while Hong Kong’s Hang Seng firmed 0.17%

At 11.24am, European stocks were a little firmer. The FTSE 100 was up 0.22%, France’s CAC 40 0.27% and Germany’s DAX 30 0.33%.

“Whereas 2019 was overshadowed by geopolitical worries, 2020 looks to be overcome by health and environmental concerns,” said Rand Merchant Bank (RMB) analyst Nema Ramkhelawan-Bhana said in a note.

“As anticipated, the fear factor bested China’s financial markets as they reopened after the extended Lunar New Year’s break, with equities taking the most pain as the CSI 300 index plummeted to its weakest level since 2015”, Ramkhelawan-Bhana said.

At 11.24am, the JSE all share was little changed at 56,097.6 points, while the top 40 index had firmed 0.12%. Banks were up 0.61% and financials 0.12%. Gold miners had lost 2.16% and platinum mines 1.61%.

Gold fell 0.8% to $1,576.9/oz and platinum 1.36% to $953.3/oz. Brent crude was down 0.49% to $56.36 a barrel.

Locally, load-shedding is expected to continue until Thursday, but the news regarding the virus outbreak is expected to hog the spotlight.

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