HONG KONG: Shares in Hong Kong and mainland China plunged Monday on growing fears over the Chinese economy as a fast-spreading Covid outbreak forces lockdowns in major cities, while traders were also worried about an expected sharp hike in US interest rates.
The Hang Seng Index plunged 3.73 percent, or 769.18 points, to 19,869.34.
The Shanghai Composite Index shed 5.13 percent, or 158.41 points, to 2,928.51, while the Shenzhen Composite Index on China’s second exchange dived 6.48 percent, or 124.09 points, to 1,790.03.
China’s struggle to get a grip on a Covid outbreak that has forced Shanghai – the country’s biggest city – into lockdown and dealing a blow to demand.
Officials in the finance hub reported 39 deaths Sunday, its highest daily toll despite weeks of strict containment measures, while Beijing warned of a “grim” situation as infections rise.
The lockdowns will “cause a logistical problem that’s going to affect not just China but also the rest of the world”, OANDA’s Jeffrey Halley told Bloomberg TV.
Officials’ determination to continue with a zero-Covid policy as well as a lack of government stimulus, “that all points to lower China stocks and we are going to see a weaker yuan going forward”.