Stock market slumps as new virus concerns investors

China's benchmark Shanghai Composite Index plunged 8.7 percent as trading resumed on Monday, as the market started pricing in investors' growing concern over the coronavirus outbreak that further spread over the Lunar New Year holiday.

Yet the pandemic should only lead to short-lived disruption, instead of changing the market trend and the major outperforming sectors, according to a CITIC Securities report.

As a one-off shock, the epidemic is expected to cause a quick and deep market slump, followed by a slow bottoming-out, the report said, citing that the A-share market should be on an upward trajectory over the next two and three years driven by tech shares.

By 10:10 am, the SCI was trading at 2754 points, 7.5 percent below the closing price of the previous session on Jan 23.

The National Bureau of Statistics said on Monday that profits of China's major industrial firms declined 6.3 percent year-on-year December last year, down from the 5.4 percent year-on-year expansion in November.

China's industrial sector may see prolonged pressure in the near future as the coronavirus outbreak weighs on market demand and leads to the shortage of labor, analysts said.

But in the medium and long run, the industrial sector is expected to meet its recovering season as the fundamentals of the Chinese economy remain strong, they said.