Shares in China fell on signs that widespread lockdowns could once again become common for the world’s second-largest economy, while oil benchmarks dropped on indications that Russia might be willing to engage in more serious negotiations with Ukraine.
Hong Kong’s Hang Seng index fell 2.5 per cent and China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks dropped 1.2 per cent after all 17mn residents of Shenzhen were put under lockdown to contain a surge in cases of the Omicron variant of Covid-19.
The Shenzhen lockdown followed on the heels of similar measures in Changchun, a city of 9mn in northeast China, with cases also rising in Shanghai and a number of other major cities.
China reported more than 1,800 cases of Covid-19 on Sunday, the most daily cases in two years, as authorities struggled to contain the country’s biggest coronavirus outbreak since the pandemic erupted in Wuhan in early 2020.
“If the lockdown is extended, China’s economic growth will be significantly affected,” said Raymond Yeung, chief economist for Greater China at ANZ.
Yeung said that “half of China’s GDP and population will be impacted this time” and that a one-week lockdown of the affected region could shave about 0.1 percentage points off the country’s economic growth this year.
Elsewhere in Asia, Japan’s Topix rose 0.9 per cent and Australia’s S&P/ASX 200 climbed 1.1 per cent following tentative signs of movement in talks between Ukraine and Russia. Mykhailo Polodnyak, an adviser to Zelensky, said Russian negotiators were “no longer making ultimatums, but are listening carefully to our proposals”.
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