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As Bloomberg news reports, “traders are bracing for the impact of the deadly coronavirus on Hong Kong’s stock market as it reopens Wednesday for the first time this week following the Lunar New Year holiday.

Hang Seng Index futures will start trading from 9.15 a.m. local time. Hong Kong traders have been off their desks since midday Friday, before reported cases of the novel coronavirus surged globally and the number of confirmed deaths in China rose by more than threefold. The offshore yuan was little changed Wednesday.

Market implications

The Nikkei is already down 0.5% and sitting just above the lows of the day. The yen is firm despite a strong US dollar. As traders soak up the contagion risks of the virus, we may see a sharp gap to the downside and a subsequent pull on risk apatite in the open – logically, especially considering its tourism trade as the tourism industry is one of the major pillars of the economy of Hong Kong. Racked by antigovernment protests since June 2019, Hong Kong was already on the brink of recession.