March 16, 2020 / 5:13 AM / 16 days ago

China, Hong Kong stocks fall on dire data, global spread of virus

* SSEC -0.6%, CSI300 -1.4%, HSI -2.2%

* HK->Shanghai Connect daily quota used -5%, Shanghai->HK daily quota used 7.3%

* FTSE China A50 -1.4%

SHANGHAI/HONG KONG, March 16(Reuters) - China stocks fell on Monday as grim data highlighted the extent of the coronavirus’ impact on the world’s second-largest economy, and another emergency rate cut by the U.S. Federal Reserve failed to ease fears about the pandemic’s fallout.

** The CSI300 index fell 1.4% to 3,839.06 by the end of the morning session, while the Shanghai Composite Index lost 0.6% to 2,871.49.

** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 3.18%, while Japan’s Nikkei index was down 0.32%.

** China’s industrial output contracted at the sharpest pace in 30 years in the first two months of the year as the fast spreading virus and strict containment measures severely disrupted the economy, data showed.

** To help its virus-hit economy, the central bank cut the cash that banks must hold as reserves on Friday for the second time this year, releasing 550 billion yuan ($78.64 billion).

** China will encourage banks to offer more trade finance and also issue more consumer credit, said an official with the banking regulator on Sunday.

** Meanwhile, the central bank left borrowing cost on its medium-term loans unchanged on Monday.

** The Fed and global central banks moved aggressively on Sunday to buttress a world economy unravelling rapidly amid the coronavirus pandemic, with the Fed slashing interest rates to near zero, pledging hundreds of billions of dollars in asset purchases and backstopping foreign authorities with the offer of cheap dollar financing.

** Expectations of further stimulus after dismal data and fewer new local virus cases capped Monday’s losses.

** China has tightened checks on international travellers at Beijing airport and said it would centrally quarantine all arrivals at its capital, after new imported virus cases surpassed locally transmitted infections for a second day.

** The main reason behind China stocks’ relative strength is that the outbreak has been brought under control by Beijing, while it continues to spread rapidly overseas, said Fu Yanping, an analyst with China Galaxy Securities.

** Besides, A-shares are relatively cheap in terms of valuations while their Wall Street peers were at record highs before the recent correction, he added.

** In Hong Kong, the Hang Seng index dropped 2.2%, to 23,507.13, while the Hong Kong China Enterprises Index lost 2.6%, to 9,396.54.

** The Hong Kong Monetary Authority lowered its base rate charged through the overnight discount window to 0.86%. ($1 = 6.9935 Chinese yuan) (Reporting by Luoyan Liu and Noah Sin; Editing by Subhranshu Sahu)

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