Chinese and Hong Kong stocks slumped on Thursday after another US interest rate hike and concern over rising Covid-19 cases on the mainland.
The Hang Seng index dropped 3.1% to 15,339.49 at the close of trading, wiping out gains from Wednesday, while the Hong Kong China Enterprises Index lost 3.5%.
On the mainland, the bluechip CSI300 index recovered after falling 1.2% to be down 0.8%, to 3,647.90 at the close, while the Shanghai Composite Index slipped by 0.2% to 2,997.81.
Markets were weak in Asia, tracking losses overnight on Wall Street following the US Federal Reserve’s latest rate increase of 75 basis points.
The Fed undermined global sentiment by shifting its outlook on tightening from short and sharp to long and high, killing any thought of a near-term pause.
The market was not helped by a private sector business survey showing China’s services activity contracted again in October amid fresh Covid outbreaks.
Covid Count Rises
Meanwhile, electric vehicle maker NIO said it had suspended production in the eastern city of Hefei amid rising Covid cases and Yum China, operator of the KFC and Pizza Hut chains, said it was temporarily closing or reducing services at over 1,000 of its restaurants in China.
China recorded 3,200 daily local Covid cases for November 2, the highest level in two and a half months, official data showed on Thursday.
In Hong Kong, stocks fell across the board, as the city’s central bank raised rates following the Fed move.
Most sectors fell in China too, but the tech-focused STAR Market rose 1.1%, while defence stocks remained buoyant.
- Reuters with additional editing by Jim Pollard
NOTE: This report was updated with details after the close of trading on November 3, 2022.