MSCI’s broadest index of Asia-Pacific shares outside Japan shed 0.35%, Chinese blue chips declined 0.56% and Hong Kong dropped 0.46%
Shares in Asia failed to track Wall Street higher on Friday as the spread of the Delta variant of the coronavirus across the region heightened concerns about economic recovery.
MSCI’s broadest index of Asia-Pacific shares outside Japan shed 0.35%, dragged down by Chinese blue chips, which declined 0.56% and Hong Kong dropped 0.46%.
Japan’s Nikkei rose 0.11%.
There are two main drivers of volatility in the market this week, firstly everything surrounding the Chinese regulatory drive, and secondly the severity of Delta outbreaks around the region, said Carlos Casanova, senior economist Asia at UBP.
In its highest daily count for new Covid cases in the current outbreak, China reported 124 confirmed cases on Friday, fuelled by a surge in locally transmitted infections.
Thailand and Malaysia both reported record daily cases on Thursday.
While the MSCI Asian benchmark has clawed back much of last week’s China-driven losses, it is still down just over 10% from all time highs hit in February.
In contrast, the MSCI world shares index was just short of a record high hit on Wednesday.
International investors are still wrapping their head around what happened in the education sector in China, and expect that will continue to drive sentiment, said Casanova. The regulatory drive is not over yet, it should continue to be a factor in the next three to six months or so.
Elsewhere in the region, PT Bukalapak.com Tbk, an Indonesian e-commerce company backed by Ant Group and Singapore sovereign fund GIC, advanced 24.7% on its market debut after raising $1.5 billion in the country’s biggest ever initial public offering (IPO).
Analysts say the listing will set the benchmark for IPO hopefuls in a region where global investors are chasing fast growing companies.
In the US, the Nasdaq and S&P 500 ended at record levels on Thursday after a spate of strong corporate earnings and a further decline in the country’s unemployment claims. Traders now eye the jobs report for July due later today.
U.S. stock futures, the S&P 500 e-minis, were 0.1% lower.