February 28, 2020 / 8:04 AM / a month ago

China stocks have worst month since May 2019 over coronavirus fears

* SSEC down 3.7%, CSI300 down 3.6%

* Monthly drop worst since May, but smaller than other markets

By Luoyan Liu and Noah Sin

SHANGHAI/HONG KONG, Feb 28 (Reuters) - China stocks slumped on Friday to cap the worst month since May last year, as fears of the coronavirus outbreak turning pandemic sent global markets tumbling.

The Shanghai Composite index’s 3.2% fall for February, though, is modest by comparison with other major markets thanks to a mid-month rally powered by policy support.

For the day, the Shanghai Composite Index and the blue-chip CSI300 index both fell more than 3.5%, marking the biggest daily fall since Feb. 3, when infections were rapidly spreading in China.

“We may have underestimated the impact of the virus outbreak outside China,” said Yan Kaiwen, analyst at China Fortune Securities in Shanghai.

“While China has managed to bring the virus outbreak under control quickly, there is no guarantee that other countries can manage to do to do the same,” he said.

For the month, CSI300 shed 1.6%, while SSEC lost 3.2%, posting its worst month since May 2019, and its largest weekly fall since last April.

By comparison, Japan’s Nikkei has plunged 9% this month, and the S&P 500 was down nearly 8% up to close on Feb. 27.

Both Chinese indexes have recovered from their Feb. 3 bottom, as Beijing has pledged robust measures to help cushion the impact from the virus outbreak.

Analysts at Everbright Securities said the shock from the global rout will likely be short term, as Chinese growth becomes increasingly tied to Beijing’s policy support.

Also adding to support for the recovery were signs of a slowdown in new infections and deaths from the coronavirus, reinforcing views the outbreak has been brought under control in the country.

New infections in mainland China fell on Thursday to the slowest since Jan. 23, the country’s National Health Commission said. (Reporting by Luoyan Liu in Shanghai and Noah Sin in Hong Kong.)

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