HSI Sheds 2% As New Outbreak Fears Maul Asian Stocks

Hong Kong stocks tumbled more than 2 percent on Monday as a spike in new virus infections in several countries including China and the US fanned fears of a second wave that could knock economic recovery off course.

The Hang Seng Index shed 2.2 percent, to 23,776.

Across the border, the Shanghai Composite Index sank just over 1 percent, to 2,890 but the Shenzhen Composite Index dropped 0.3 percent, to 1,865.

Tokyo tumbled 3.5 percent and Seoul sank 4.8 percent, while Sydney, Singapore, Mumbai and Bangkok were all down more than 2 percent.

Manila also lost 4.8 percent and Taipei and Jakarta each slipped 1.1 percent, with Wellington off 0.4 percent.

Emerging market stocks had rallied to three-month highs earlier in the month, as monetary and fiscal stimulus from around the globe inspired some confidence in risk assets.

A fresh Covid-19 outbreak in Beijing and rising cases in the United States hurt optimism over a smooth reopening of major economies, while weaker-than-expected industrial output data from the mainland continued to highlight the outbreak's economic damage.

"The rally, driven by monetary and fiscal stimulus, suddenly appeared on shaky grounds as if investors realised they can no longer be detached much further from economic fundamentals," Hussein Sayed, chief Market Strategist at FXTM, wrote in a note.

"The resurgence of coronavirus cases in Beijing, parts of the US and Japan as economies further release their lockdowns is sparking fears of a second wave, and without a vaccine in hand, the second wave could be more threatening than the first." (AFP, Reuters)