A retail investor checks the information on the screen at a stock exchange center in Beijing's Shijingshan District on May 6, 2019. (Photo:Li Hao/GT)

The spreading Novel pneumonia has been dominating headlines and has impacted China's capital markets ahead of the Spring Festival holidays. Analysts predict that fluctuations in the market will be short-term and investors should focus on value investing.

As confirmed cases of pneumonia caused by a novel and contagious coronavirus continue to emerge, prices of some companies have been affected, with the majority of stocks trending down. 

China's A-share market closed lower on Tuesday, with the benchmark Shanghai Composite Index down 1.41 percent, the Shenzhen Component Index down 1.46 percent and the ChiNext index down 0.76 percent.

Vaccine-related shares, however, rallied on Tuesday. Wuhan Hiteck Biological Pharma Co closed at 35.61 yuan ($5.16) per share, hitting the daily ceiling of a 10 percent gain.

By contrast, tourism, consumption and aviation-related stocks collectively swooned on Tuesday. Hengdian Entertainment Co dropped 7.1 percent to 16.88 yuan per share, and China's famous hotpot eatery Haidilao International Holding closed at HK$32.15 ($4.14) per share in Hong Kong, down 4.2 percent.

The sudden escalation of the novel coronavirus pneumonia outbreak in Wuhan, Central China's Hubei Province, will place pressure on the Chinese mainland's consumption sector with ramifications on Hong Kong and other neighboring markets, analysts say. 

Pharmaceutical companies may benefit from it, according to financial news site Caixin.com, citing an analysis from ICBC International Holdings.

However, some analysts predict stock-market fluctuations will be short-term.

Fluctuations of pneumonia-related shares are mostly due to investors' perceptions of the new virus, Li Daxiao, chief economist at Shenzhen-based Yingda Securities, told the Global Times on Tuesday.

Ming Ming, chief macro and fixed-income analyst at CITIC Securities, agreed that the latest fluctuation in the capital market was a reflection of investors' growing concerns, as they want to know when the number of infected virus patients could be put under control. 

As to future market performance, market watchers suggest investors do a breakdown analysis on what companies to buy or sell, including an analysis of the effectiveness of a firm's products or services, as well as the company's research and development capability.

Though it is important to shore up protections to contain the spread of the outbreak, there's no need for the capital market to overreact, Li Daxiao said, adding that the current coronavirus pneumonia outbreak is not SARS that China encountered in 2003.