SHANGHAI: Chinese shares posted their biggest drop in nearly a month on Monday hit by COVID-19 curbs and worries over an inversion in the 10-year spread between domestic and US yields, high domestic factory-gate and consumer inflation.
The blue-chip CSI300 index fell 3.1% to 4,100.07, and the Shanghai Composite Index lost 2.6% to 3,167.13.
The Hang Seng index fell 3% to 21,208.30, and the China Enterprises Index lost 3.8% at 7,208.49 points.
The four indexes all posted their biggest declines since March 15.
Mainland China reported 1,184 new confirmed coronavirus cases and 26,411 new asymptomatic cases on April 10.
“With the government doggedly sticking to its COVID-zero policy, fears are increasing that an extended lockdown in the country, which may spread to other major industrial cities, will darken an already cloudy outlook for China’s growth,” OANDA senior market analyst Jeffrey Halley said.
Electric vehicle maker Nio Inc suspended production as China faces its worst coronavirus outbreak in two years, while battery giant Contemporary Amperex Technology (CATL) implemented a “closed-loop management” system at its main factory to keep production going.
Shares of Nio plunged 11.4% in Hong Kong, while CATL lost 7.3% in Shenzhen.
EV makers in China produced far fewer cars in total than expected in March, due to strict pandemic curbs.
Further weighing on sentiment, data showed China’s factory-gate and consumer prices rose faster than expected in March, raising questions among some analysts about how much its central bank will be able to ease monetary policy.
Also, yields on China’s 10-year government bonds fell below US Treasury yields for the first time in 12 years, dimming the attractiveness of yuan-denominated assets.
Outflows through the Northbound leg of Stock Connect totalled 2.87 billion yuan ($450 million), according to Refinitiv data.
China will step up policy measures in a timely way to support the economy while studying new stimulus plans, state media on Friday quoted Premier Li Keqiang as saying.
Shares of new-energy firms slipped 5.5%, new energy vehicles plunged 6.5% and automobiles declined 4.7%.
Stocks in semiconductors and non-ferrous metals tumbled roughly 5% each, while consumer staples and real estate developers lost 1.7% and 2.6%, respectively.
Tech giants listed in Hong Kong tumbled 5.2%, with video and livestreaming platform Bilibi down 13.2%. Index heavyweights Meituan and Alibaba retreated more than 5% each, and Tencent was down 4.3%.
Hong Kong-listed shares of mainland property developers lost 4.1%. Zhenro Properties declined 12.5% as it missed interest payments on two offshore bonds and expected four more defaults in the coming months due to the lockdown in Shanghai. The consumer discretionary subindex ended down 5.3%.