Stocks in Hong Kong and mainland China markets were down on Monday amid increasing concerns over new COVID restrictions, while other Asian equities dropped after better-than-expected August data in US nonfarm payrolls reinforced the potential of aggressive interest rate hikes by the Federal Reserve.
The Hang Seng index posted a weak performance, losing 1.2%, with shares of tech giants including Baidu Inc., Tencent Holdings Ltd., and Alibaba Group Holding Ltd. declining between 1.5% and nearly 3% to head the decline.
In mainland China, the blue-chip CSI 300 index fell 0.2%, while the Shanghai Composite index traded flat before gaining 0.4%.
Meanwhile, broader Asian stock markets edged lower after data showed Friday that the US added 315,000 jobs last month, beating forecasts of 300,000 jobs and strengthening the Fed’s hawkish stance this year.
Investors now forecast a 75-basis-point hike from the central bank in September.
South Korea’s KOSPI shed 0.2%, with economic disruptions due to typhoon Hinnamnor expected to hit the country.
Australia’s S&P/ASX 200, on the other hand, was up by 0.3% after the country’s services Purchasing Managers’ Index (PMI) registered an unexpected growth of 50.2 in August.
New COVID Restrictions in China
Investors in the weekend further lost confidence in Hong Kong and China stock markets after the cities of Shenzhen and Chengdu announced tiered anti-COVID measures and lockdown extensions, respectively, to curb new outbreaks.
That was the Chinese government’s latest in a series of restrictions it implemented, as it continues to uphold a strict zero-COVID policy. However, its commitment to the policy has weighed heavily on the performance of the world’s second-largest economy in 2022.
Chinese stocks took a steep dive this year, while the yuan hit its lowest level in two years.
Still, the Caixin Services PMI showed on Monday that China’s service sector activity stood at 55.0 in the previous month, compared to the reading of 55.5 in July, but stayed firmly in the expansion area.
That signaled some signs of improvement in the country following the pandemic.
