SHANGHAI/HONG KONG - Investors erased $393 billion from China’s benchmark stock index on Monday, sold the yuan and dumped commodities as fears about the spreading coronavirus and its economic impact drove selling on the first day of trade in China since the Lunar New Year.

A nearly eight-percent plunge on the Shanghai Composite index was its biggest daily fall in more than four years.

The Chinese yuan blew past the 7-per-dollar mark, Shanghai-traded commodities from palm oil to copper hit their maximum down limits.

The wipeout came even as the central bank made its biggest cash injection to the financial system since 2004 and despite apparent regulatory moves to curb selling.

The total number of deaths in China from the coronavirus rose to 361 as of Sunday.

It had stood at 17 when Chinese markets last traded on Jan. 23.

“You wanted to know what a real decoupling from China might look like, or what a ‘what if everyone just stayed at home and didn’t buy anything?’ economic thought-experiment looks like? Well here you are, folks,” Rabobank strategist Michael Every said in an afternoon note.

The yuan began onshore trade at its weakest this year and was down 1.2 percent by the afternoon, sliding past the symbolic 7-per-dollar level CNY= to 7.0155. 

Shanghai-traded oil, iron ore, copper and soft commodities contracts all posted sharp drops, catching up with sliding global prices.

The new virus has created alarm because it is spreading quickly, much about it is unknown, and authorities’ drastic response is likely to drag on economic growth.

“This will last for some time,” said Iris Pang, Greater China economist at ING.

“It’s uncertain whether factory workers, or how many of them, will return to their factories,” she said.

“We haven’t yet seen corporate earnings since the [spread of the] coronavirus. Restaurants and retailers may have very little sales.”

More than 2,500 stocks fell by the daily limit of ten percent.

The Shanghai Composite closed down 7.7 percent at 2,746.6, its lowest since August and a modest recovery from being down nearly nine percent in early trade.

Copper SCFcv1 sank to its lowest in more than three years, falling by its daily limit of seven percent, while aluminum SAFcv1, zinc SZNcv1 and lead SPBcv1 shed more than four percent and soybeans DSAcv1 dropped two percent. 

Bond prices, meanwhile, surged, with March futures contracts for 10-year bonds jumping 1.4 percent CFTH0.

The People’s Bank of China (PBOC) said the stocks plunge had irrational or even panic elements, triggered by herd behavior, in a newspaper commentary published after markets closed.

The sell-off cast a pall over the mood in Asia, though losses were contained because a slide had been expected.

Hong Kong's Hang Seng .HSI, which shed almost ten percent in two weeks, was steady.