China’s COVID protests cause stocks in Asia to fall, while India is close to reaching record highs.
Most Asian stock markets fell on Monday because of growing protests in China against the government’s strict zero-COVID policy. But Indian stocks traded close to all-time highs as markets got ready for smaller increases in interest rates in the country.
The blue-chip Shanghai Shenzhen CSI 300 index fell by 1.7%, and the Shanghai Composite index dropped by 1.2%. The Hang Seng fell by 2.1%, making Hong Kong stocks the worst performers in Asia.
Chinese protesters fought with the police in several major cities over the weekend. They were upset that the government’s strict “zero-COVID” policy limits how and where people can move and what they can do. The latest, but first-ever, round of civil disobedience was caused by a deadly fire in the country’s far west, which was reportedly made worse by lockdowns.
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Civil unrest is happening at the same time that China has put strict rules back in place in several major cities because of record-high daily infection counts. This made people worry that the Chinese economy could face more problems in the near future, which could cause it to slow down.
Other markets that were affected by China turned away from this idea. The KOSPI index in South Korea went down by 1.1%, and the Taiwan Weighted index went down by 1.2%. Taiwanese stocks also fell after President Tsai Ing-wen quit as head of the ruling party after the party lost last week’s local election.
The S&P/ASX 200 index in Australia fell 0.4%, and the Nikkei 225 index in Japan fell 0.5%. On Monday, more people bought low-risk safe havens like the dollar.
Indian stocks went against the trend and went up a little bit, trading near record highs. This is because more and more people think that the Reserve Bank of India will only raise interest rates by a small amount in the coming months.
Bets on this happened more after Indian inflation seemed to go down a lot in October, making it less likely that rates would need to go up sharply again.
The benchmark BSE Sensex 30 and the blue-chip Nifty 50 both went up by 0.2%. Both indexes were trading near their all-time highs, which was helped by dovish signals from the Federal Reserve last week.
Even though the rupee is getting weaker and commodity markets aren’t doing well, the International Monetary Fund says that the Indian economy will be one of the best-performing economies this year, with a growth rate of 6.8% in 2022.
The Philippine stock market also did better than the rest of the region, rising 1% after being the best performer in the region last week.
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Over the past two weeks, most Asian stocks went up because investors bought assets with a lot of risk because they thought the U.S. Federal Reserve would only raise interest rates slowly.
