SHANGHAI, Nov 28 (Reuters) – Chinese stocks slumped on Monday as recent monetary easing measures failed to offset investor worries about protests against strict COVID-19 curbs in the world’s second-largest economy, while the yuan weakened versus the dollar.
A U.S.crackdown on Chinese tech giants citing national security concerns also weighed on shares of tech firms.
China’s blue-chip CSI 300 Index fell 1.6% by the end of the morning session, after slumping as much as 2.7% earlier in the day, on track for its worst day in a month.Hong Kong’s Hang Seng Index lost 2%.
Amid the worries, stock investors took little cheer from a central bank decision on Friday to cut banks’ required reserve ratio (RRR) in a bid to aid the struggling economy. The widely expected RRR cut did however add downward pressure on the Chinese currency.
The onshore yuan weakened as much as 1.1% to 7.2435 per dollar at one point, the softest level since Nov.10, and was trading at around 7.2 at midday.
“The social unrest in China has fuelled concerns over the social instability in the country and that the road to reopening could be a bumpy one,” said Ken Cheung, chief Asian FX strategist at Mizuho Bank in Hong Kong.
The wave of civil disobedience is unprecedented in mainland China since President Xi Jinping assumed power a decade ago and comes amid mounting frustration over his signature zero-COVID policy as well as record high daily infections.
While state media has not reported the protests, photos and videos of the protests circulated on social media.
Meanwhile, daily new COVID cases in China reached a record high, with more than 40,000 new infections reported for Sunday, prompting widespread lockdowns and other curbs on movement and business across the country.
In fresh evidence of the hit to China’s economy from COVID, data on Sunday showed Chinese industrial firms’ overall profits declined further in the January-October period.
Most sectors in mainland markets dropped, with shares in financials, healthcare and energy down roughly 2% each.
Shares in Chinese surveillance equipment maker Dahua Technology Co, video surveillance firm Hangzhou Hikvision Digital Technology Co Ltd and telecoms firm Hytera Communications Corp Ltd dropped, following a sales ban by the Biden Administration.
Bucking the trend, transport and kbc에이전시 tourism-related companies rose, as some investors bet recent COVID flare-ups and social unrest might push China to end its zero-COVID policy earlier.
A tourism subindex jumped more than 3%, while stocks in Spring Airlines surged 4.6%, and UTour Group jumped more than 7%.
Casino stocks jumped 6.6% as Macau government said its six incumbent casino operators would be given new licences to operate in the world’s biggest gambling hub from January.Wynn Macau soared nearly 16% to lead the rally.
Goldman Sachs chief China economist Hui Shan forecast a 30% probability of China reopening before the second quarter next year, including some chance of a forced and disorderly exit.
“The central government may soon need to choose between more lockdowns and more COVID outbreaks,” she wrote in a late Sunday note.
Hong Kong-listed tech giants and real estate developers led the decline in the city’s market, with the Hang Seng Tech Index down 2.3% and the Hang Seng Mainland Properties Index slumping more than 4%.(Reporting by Shanghai Newsroom; Editing by Himani Sarkar and Sam Holmes)