China markets tank as protests erupt over Covid lockdowns

Hong Kong
CNN Business
 — 

China’s major stock indices and its currency have opened sharply lower Monday, as widespread protests against the country’s stringent Covid-19 restrictions over the weekend roiled investor sentiment.

Hong Kong’s Hang Seng

(HSI) Index fell as much as 4.2% in early trading. It was last down 3.5%. The Hang Seng

(HSI) China Enterprises Index, a key index that tracks the performance of mainland Chinese companies listed in Hong Kong, tumbled 3.6%.

In mainland China, the benchmark Shanghai Composite fell 1.5%, and the tech-heavy Shenzhen Component Index dropped 1.6%.

The yuan also plunged against the US dollar Monday morning. The offshore rate, which trades overseas, dropped 0.6% to 7.234 per dollar. The onshore yuan, which trades in the tightly controlled domestic market, weakened 0.7% to 7.218 per dollar.

The markets tumble comes after protests erupted across China in an unprecedented show of defiance against the country’s stringent and increasingly costly zero-Covid policy.

In the country’s biggest cities, from the financial hub of Shanghai to the capital Beijing, residents gathered over the weekend to mourn the dead from a fire in Xinjiang, speak out against zero-Covid and call for freedom and democracy.

Such widespread scenes of anger and defiance — some of which stretched into the early hours of Monday morning — are exceptionally rare in China.

The plunging yuan suggests that “investors are running ice cold on China,” said Stephen Innes, managing partner of SPI Asset Management, adding that the currency market might be “the simplest barometer” to gauge what domestic and overseas investors think.

He expects social discontent could increase in China over the coming months, testing policymakers’ resolve to stick to the zero-Covid mandates.