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Asia stocks drop on Covid concerns

Covid concerns

Nikkei 225 dropped 0.91%, KOSPI shed 0.14%, ASX 200 declined 0.26%, Hang Seng Index lost 0.88%, while Shanghai Composite was down 0.30%

Stocks in the Asia Pacific were mostly down on Tuesday morning, as the spread of the Delta variant of coronavirus in the region’s key markets soured risk sentiment.

Japan’s Nikkei 225 dropped 0.91% by 2:47 AM GMT. Data released earlier in the day said the Tokyo core consumer price index (CPI) grew 0.1% year-on-year in July, while the Tokyo CPI contracted 0.1% year-on-year. Tokyo’s CPI excluding food and energy grew 0.2% month-on-month in July.

South Korea’s KOSPI dropped 0.14%, with the country’s CPI growing a better-than-expected 2.6% year-on-year (YOY) in July. The Bank of Korea also released the minutes from its latest Financial Stability Board meeting.

In Australia, the ASX 200 dropped 0.26%. Australian building approvals contracted 6.7% month-on-month in June, while private house approvals dropped 11.8% in the same month.

Hong Kong’s Hang Seng Index shed 0.88%. China’s Shanghai Composite was 0.30% lower while the Shenzhen Component climbed 2.25%.

The Reserve Bank of Australia (RBA) will hand down its policy decision for August later in the day, with the Bank of England (BoE) following on Thursday and the Reserve Bank of India (RBI) on the following day.

The global spread of COVID-19 continues to be of concern to investors. Restrictive measures have been re-implemented in China to curb the latest outbreak as the pandemic spreads to inland cities from the coast. Investors also continue to monitor shares in China and Hong Kong, as China continues to tighten regulation in sectors including technology and private education.

It’s a challenging time for Asian equities with the uncertainty that has been created by the regulatory measures. There was some handholding from the China Securities Regulatory Commission (CSRC) last week to limit the spread of the contagion and counter the popular thinking of which sector is next. That worked for a few days but then we saw the flows start to reverse again, BNP Paribas Asset Management head of Asian equities Zhikai Chen told Reuters.

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