Stocks in Asia declined on Friday as fears over the spread of the coronavirus globally drove investors to safety.

China’s Shenzhen stocks led losses among major markets regionally as they closed sharply lower. The Shenzhen component was 4.8% lower at 10,980.77 while the Shenzhen composite dropped 4.928% to approximately 1,801.75. The Shanghai composite was down 3.71% to end its trading day at 2,880.30.

Hong Kong’s Hang Seng index dropped 2.42% to close at 26,129.93.

Japanese stocks also saw major declines. The Nikkei 225 dropped 3.67% to close at 21,142.96 while the Topix index fell 3.65% to end its trading day at 1,510.87.

Data on Friday showed retail sales in Japan declining 0.4% year-on-year in January. That compared against a median market forecast for a 1.1% decline, according to Reuters.

South Korea’s Kospi was down 3.3% to end its trading day at 1,987.01 while the S&P/ASX 200 in Australia plunged 3.25% to close at 6,441.20.

Overall, the MSCI Asia ex-Japan index dropped 2.57%.

Market movements in recent days have resulted in seven major markets falling into correction territory, including Japan’s Nikkei 225 and South Korea’s Kospi.

Meanwhile, the yield on the benchmark U.S. 10-year Treasury touched new record lows, according to Reuters. It was last at 1.1666%.

The rapid spread of the coronavirus outside of China, where the disease was first reported, has weighed on sentiment in recent days over its potential impact on economic growth and corporate earnings. In South Korea, more than 1,700 cases of infection have been confirmed, while over 600 people have contracted the virus in Italy so far.

“I think what’s happening right now is the concern for investors is that they believe that this epidemic is probably, you know, getting to a stage where it could become a global pandemic,” Chetan Seth, Asia Pacific equity strategist at Nomura, told CNBC’s “Street Signs” on Friday.

“If you look at, you know, the data around new virus cases … what’s happening is … in China the number of cases are going down but outside of China the number of cases are going up and I think that’s where the uncertainty comes from,” Seth said.

Political confusion in Malaysia

Meanwhile, political uncertainty continued to add to investor concerns in the Malaysian markets, as the FTSE Bursa Malaysia KLCI Index slipped 1.52% to close at 1,482.64 on Friday. The Malaysian ringgit also weakened to 4.211 against the dollar after seeing levels below 4.17 last week.

Malaysia slid into political turmoil after Mahathir Mohamad unexpectedly resigned as the country’s prime minister on Monday.

Mahathir, now the interim prime minister, said on Thursday that parliament would convene Monday for its 222 members to vote for their preferred prime minister pick. But the speaker of parliament rejected Mahathir’s call for the parliamentary session – a decision agreed by the Malaysian king, who added that he will allow political party leaders an opportunity to name their prime minister pick.

Overnight on Wall Street, the Dow Jones Industrial Average plunged 1,190.95 points — its largest one-day point decline in history — to close at 25,766.64. The S&P 500 slid 4.4% to end its trading day at 2,978.76 while the Nasdaq Composite dropped 4.6% to close at 8,566.48. The Dow had its worst day since February 2018 while the Nasdaq and S&P 500 posted its biggest one-day loss since August 2011.

Thursday’s losses put the Dow, S&P 500 and Nasdaq in correction territory, which is defined on Wall Street as down more than 10% from their recent highs.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 98.118 after dropping from levels around 99.0 yesterday.

“Many of our clients are asking why the dollar relinquished its safe haven status and it all boils down to the fear that the US will be next to experience a sudden increase in coronavirus cases,” Kathy Lien, managing director of foreign exchange strategy at BK Asset Management, wrote in a note dated Feb 27.

The Japanese yen, often viewed as a safe-haven currency in times of economic uncertainty, changed hands at 108.53 per dollar after seeing levels above 111.2 earlier in the trading week. The Australian dollar was at $0.6533 after seeing an earlier high of $0.6585.

— CNBC’s Fred Imbert and Yen Nee Lee contributed to this report.



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