Hold Seng Index plunges to beneath 17,000 factors as Beijing vows to stay with the controversial pandemic technique.
Hong Kong’s inventory market has plummeted to its lowest degree in additional than 10 years after China doubled down on its punishing dynamic “zero COVID” pandemic technique.
The Hold Seng Index on Tuesday plunged to beneath 17,000 factors for the primary time in 11 years, as Beijing tightened COVID curbs and reiterated warnings towards any leisure within the battle towards the coronavirus.
Beijing’s doubling down on “zero COVID” comes as issues over China’s economic system are already elevated as a result of United States’ crackdown on Chinese language tech corporations, rising rates of interest globally, and home challenges, together with a deflating property bubble.
Chinese language tech shares had on Monday tumbled as a lot as 20 % after US President Joe Biden introduced new guidelines requiring corporations to acquire a licence to promote superior computing semiconductors to China.
“It’s related to a number of issues all happening directly – the zero COVID coverage in China, worsening financial information from the mainland, rising rates of interest globally, the Ukraine conflict, the property disaster on the mainland and now the Biden administration chopping off China from most superior US semiconductor expertise, which is sending chip shares in Hong Kong, China and around the globe plunging,” Peter Lewis, a former funding banker and host at Radio Tv Hong Kong, advised Al Jazeera.
Cities together with Shanghai, Shenzhen, Xian and Fenang have ramped up testing and rolled out new restrictions, together with neighbourhood lockdowns and college closures, to stamp out instances earlier than a key Chinese language Communist Celebration Congress that begins on Sunday.
In an editorial on Tuesday, the Folks’s Each day reiterated the necessity to keep on with “zero COVID”, a day after calling on the general public to have “confidence and endurance” regardless of mounting financial harm because of stringent pandemic controls.
China’s economic system is predicted to develop simply 2.8 % in 2022, in contrast with the Asia-Pacific common of 5.3 %, in line with the World Financial institution.
Regardless of the tightening curbs, China’s nationwide COVID tally on Monday surpassed 2,000 instances, the best in almost two months.
Carlos Casanova, senior economist for Asia at UBP in Hong Kong, mentioned policymakers had restricted choices to prop up the subdued investor sentiment at current.
“State funds sometimes step in to assist Chinese language onshore equities forward of such occasions,” Casanova advised Al Jazeera. “Nevertheless, this time spherical will probably be totally different, as state funds have been busy stabilising the Chinese language yuan towards expectations of a stronger greenback into the year-end.”