China stocks plummet, yuan drops on COVID protests
(Updates to add details)
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.
Also, a U.S. crackdown on Chinese tech giants citing national security concerns weighed on shares of tech firms.
China's blue-chip CSI 300 Index .CSI300 fell as much as 2.7% in early trade, on track for its worst day in a month. Hong Kong's Hang Seng Index .HSI plunged as much as 4.2%.
Investors shrugged off the central bank's announcement on Friday on cutting banks' required reserve ratio (RRR) to aid a struggling economy. The move had been widely expected and added downward pressure on the yuan currency.
The onshore yuan CNY=CFXS weakened as much as 1.1% to 7.2435 per dollar at one point, the softest level since Nov. 10. It last traded at 7.2004 around 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.
Although 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 being 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.
Shares fell across the board in mainland markets, with sectors from consumer staples .CSICS and financials .CSIFN to non-ferrous metal .CSI000811 down as much as 3% each.
Shares in Chinese surveillance equipment maker Dahua Technology Co 002236.SZ , video surveillance firm Hangzhou Hikvision Digital Technology Co Ltd 002415.SZ and telecoms firm Hytera Communications Corp Ltd 002583.SZ dropped, following a sales ban by the Biden Administration.
Hong Kong-listed tech giants and real estate developers led the decline, with the Hang Seng Tech Index .HSTECH down roughly 2% and the Hang Seng Mainland Properties Index .HSI slumping more than 4%.
Reporting by Shanghai Newsroom; Editing by Himani Sarkar
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.