STOCKS collapsed yesterday with Shanghai’s benchmark index posting its biggest single-day drop since 2015 — and hundreds of firms plunging the maximum 10 percent — as panic set in over the coronavirus epidemic.

Yesterday was the first time in more than a week that Chinese investors were able to react to the virus outbreak.

The benchmark Shanghai Composite Index shed 7.72 percent, or 229.92 points, to close at 2,746.61, and the Shenzhen Composite Index dropped 8.41 percent, or 147.81 points, to 1,609.00.

More than 2,600 stocks fell by the 10 percent daily limit, according to Bloomberg financial data.

Many health-care stocks gained, however, as Chinese rush to stock up on face masks and other medical supplies.

The yuan opened at its weakest level in 2020 and slid past the symbolic 7-per-U.S. dollar level. Shanghai-traded oil, iron ore, copper and soft commodities contracts all posted sharp drops, catching up with sliding global prices.

Amid the selldown, the People’s Bank of China injected 1.2 trillion yuan (US$173.81 billion) into money markets through reverse bond repurchase agreements. It also unexpectedly cut the interest rate on those short-term funding facilities by 10 basis points.

The China Securities Regulatory Commission, the country’s top securities regulator, moved to limit short selling and urged mutual fund managers not to sell shares unless they face investor redemptions, sources said.

“It is a clear message that they want to take growth-supportive measures and keep the market reassured,” said Mayank Mishra, macro strategist at Standard Chartered Bank in Singapore.

“They are managing the situation well. The timing of the repo rate cut came a little quicker than some people were expecting, but they wanted to send a clear message.”

The impact from the virus epidemic on China’s economy will be limited and temporary, and the country’s financial markets will return to normal in the long run, a commentary in the Financial News said yesterday afternoon.

It also said the plunge in the country’s stock market yesterday was due to some irrational factors, including panic selling triggered by a “herd effect.”

(SD-Agencies)