China Market plummets on COVID worries

25 Apr 2022 , 05:31 PM

The Mainland China share market finish session at lowest level in 23-months on Monday, 25 April 2022, as risk aversion selloff triggered across the board on fears of a sharp economic slowdown after China authorities extended strict anti-pandemic lockdowns to Beijing, the nations capital. Meanwhile, less-than-expected reserve ratio cut and rate reductions also added to their disappointment.

At close of trade, the benchmark Shanghai Composite Index dropped 5.13%, or 158.41 points, to 2,928.78. The Shenzhen Composite Index, which tracks stocks on Chinas second exchange, fell 6..48%, or 124.09 points, to 1,790.03. The blue-chip CSI300 index shed 4.94%, or 198.34 points, to 3,814.91.

Sentiment took a knock on fears that strict lockdown measures will spread to Beijing, after the capital city required everyone living or working in Chaoyang district to take three COVID-19 tests this week and put more than a dozen buildings under lockdown.

Lockdowns in more than a dozen cities across the country, including the financial hub of Shanghai, have heightened worries over wider disruption to economic activity and raised some doubts whether China will be able to reach this years growth target of about 5.5%.

A broad gauge of Chinese stocks dropped to the lowest in almost two years as policy makers raced to stem an outbreak thats already hobbled Shanghai amid the governments steadfast adherence to its Covid-zero policy.

The Peoples Bank of China (PBOC) said it would step up support to the economy and maintain market stability, with a PBOC official saying China should take steps to soften the economic impact of COVID-19 and boost annual economic growth to above 5%.

CURRENCY NEWS: Chinas yuan weakened to one year low against the dollar, after the central bank set a weaker daily midpoint. Prior to market opening, the Peoples Bank of China set the midpoint rate CNY=PBOC at 6.4909 per dollar, the weakest level since August 2021. In the spot market, both onshore and offshore yuan CNY=CFXS, CNH=D3 touched their weakest levels since April 2021, trading at 6.5433 and 6.6523, respectively.

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