28 Nov 2022, 14:56

Asian markets, crude drop on China protests

  HONG KONG, Nov 28, 2022 (BSS/AFP) - Stocks and oil prices sank Monday on
concerns about protests across China calling for political freedoms and an
end to the government's hardline zero-Covid policy, fuelling uncertainty in
the world's number-two economy.

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

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

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

China-linked stocks took the brunt of selling, with Hong Kong's Hang Seng
Index down 1.8 percent and Shanghai off 0.8 percent. The yuan slipped more
than one percent.

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

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

"The best scenario is further easing and reopening, but the speed at how
things deteriorated over the weekend suggests the government needs to act
fast. The risk of the situation escalating from here and short-term
volatility remains high."

Ken Cheung of Mizuho Bank added: "It appears that the zero-Covid 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 two percent.

The selling has taken a bit out of recent gains across markets sparked by
hopes of a slowdown in the Federal Reserve's interest rate hikes as inflation
finally shows signs of softening.

However, some observers said the protests could provide long-term benefits as
they could force President Xi Jinping 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 US jobs data at the end of
the week, which could provide clues about the Fed's next moves, while
speeches by central bank boss 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
has been rising at a slower rate since June," said Michael Hewson of CMC

- Key figures around 0710 GMT -

Tokyo - Nikkei 225: DOWN 0.4 percent at 28,162.83 (close)

Hong Kong - Hang Seng Index: DOWN 1.8 percent at 17,256.50

Shanghai - Composite: DOWN 0.8 percent at 3,078.55 (close)

Euro/dollar: DOWN at $1.0371 from $1.0403 on Friday

Dollar/yen: DOWN at 138.23 yen from 139.03 yen

Pound/dollar: DOWN at $1.2069 from $1.2087

Euro/pound: DOWN at 85.93 pence from 86.03 pence

West Texas Intermediate: DOWN 2.4 percent at $74.43 per barrel

Brent North Sea crude: DOWN 2.4 percent at $81.71 per barrel

New York - Dow: UP 0.5 percent at 34,347.03 (close)

London - FTSE 100: UP 0.3 percent at 7,486.67 (close)