The Manila Times

China protests drag markets, crude

HONG KONG: Stocks and oil prices sank on Monday on concerns about protests across China calling for political freedoms and an end to the government’s hardline zero-Covid policy, fueling uncertainty in the world’s secondlargest economy.

Hundreds of people took to the streets at the weekend in the East Asian country’s biggest demonstrations since pro-democracy rallies in 1989 were crushed.

A deadly fire in the northwestern Xinjiang region on Thursday served as the catalyst for the public anger, with many blaming coronavirus lockdowns for hampering rescue efforts.

People have taken to the streets in the capital Beijing, as well as in Shanghai, Guangzhou and Chengdu, calling for an end to lockdowns after an easing of some measures had fueled hopes of a lighter pandemic approach.

Some demonstrators were even demanding the resignation of Chinese President Xi Jinping, who was recently reappointed to a precedent-breaking third term as the country’s leader during a Communist Party congress last month.

The latest targeted containment measures have been introduced as the country sees record-high infections.

China-linked stocks took the brunt of selling, with Hong Kong’s Hang Seng Index down more than 1 percent and Shanghai off 0.8 percent. The yuan slipped more than 1 percent.

There were also losses in Tokyo, Sydney, Seoul, Singapore, Taipei, Jakarta, Bangkok and Wellington.

London, Paris and Frankfurt opened with losses.

“Sentiment has turned sour as unrest across China grows,” SPI Asset Management’s Stephen Innes said. “Protest of this extent is rare in the country and raises many uncertainties.”

“The best scenario is further easing and reopening, but the speed [of] how things deteriorated over the weekend suggests the government needs to act fast. The risk of the situation escalating from here and shortterm volatility remains high,” he added.

Ken Cheung of Mizuho Bank said: “It appears that the zeroCovid policy is reaching its tipping point. More easing or refinement on the Covid measures will be needed to curb discontent.”

The prospect of a hit to demand in the world’s biggest crude importer hammered oil prices, with both main contracts down more than 2 percent.

The selling has taken a bit out of recent gains across markets sparked by hopes of a slowdown in the Federal Reserve’s (Fed) interest rate hikes, with inflation finally showing signs of softening.

However, some observers said the protests could provide longterm benefits as they could force Xi to shift away from his strict, economically damaging measures sooner.

Teneo Holdings’ Gabriel Wildau said: “I don’t expect Xi to publicly admit error or show weakness, but this wave of protests could cause the leadership to decide privately that the exit needs to proceed more quickly than previously planned.”

Investors are now looking ahead to the release of United States jobs data at the end of the week, which could provide clues about the Fed’s next moves, while speeches by Chairman Jerome Powell and other key policymakers will also be pored over.

“While the likes of Federal Reserve Governor Christopher Waller can talk about the fact that the [policy board] is not going to react based on one consumer price index print from October — when the headline number came in below expectations at 7.7 percent — the inescapable fact remains that US CPI (consumer price index) has been rising at a slower rate since June,” Michael Hewson of CMC Markets said.

Foreign Business

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2022-11-29T08:00:00.0000000Z

2022-11-29T08:00:00.0000000Z

https://digitaledition.manilatimes.net/article/281908777159453

The Manila Times