Asian markets tumble as China remains fully committed to zero-Covid policy
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Here's why stocks could rebound after a volatile month 02:00Hong Kong (CNN Business)Asian stock markets and currencies fell Friday, as investors remain worried about the US Federal Reserve's policy changes and China's renewed pledge to stick to its controversial zero-Covid policy.
Hong Kong's benchmark Hang Seng Index (HSI) tumbled nearly 4% — leading losses in Asian markets, and on track to log its worst daily drop in more than a month. Tech stocks saw a sharp sell-off, with the Hang Seng Tech Index down 5%. Mainland China's benchmark Shanghai Composite Index (SHCOMP) and its tech-heavy peer Shenzhen Component Index both slid 2.3%. Korea's Kospi (KOSPI) and India's Sensex both dropped more than 1%. Japan's Nikkei (N225) opened lower, but reversed losses later in the day. It was last up 0.9%.On the forex market, the Chinese yuan also declined against the US dollar, hitting the lowest level in one and a half years. It was trading at 6.73 per US dollar on the offshore market around 9:45 am Hong Kong time. By noon, it pared losses and traded at 6.71.China's economy is going backwards Read MoreThe Japanese yen weakened against the greenback to 130.6 per dollar. The Korean won was also down, trading around 1274 per dollar.The plunge in Asia comes after US markets fell sharply Thursday, marking their worst day of the year and eviscerating all of the gains from Wednesday.Apart from the impact from Wall Street, investors in Asia are also jittery after the latest comments from China's top leadership. On Thursday, President Xi Jinping told all levels of the government to "resolutely adhere to" the country's zero-Covid policy. He made the remarks during a meeting with the Communist Party's Politburo Standing Committee — the nation's top decision body.Officials at all levels of government should "resolutely fight with any words and acts distorting, doubting and denying China's Covid control policy," Xi said."That may serve to dampen some hopes of any Covid-19 policy shift, which suggests that economic recovery will remain prolonged and uneven," wrote Yeap Jun Rong, a market strategist at financial services firm IG Group, on Friday.China's zero-Covid policy has taken a heavy toll on the world's second biggest economy. In April, the country's gigantic services sector contracted at the second sharpest pace on record as Covid lockdowns hit businesses hard. Its manufacturing sector also shrank last month, sending the economy backward.CNN Business' Nicole Goodkind contributed to this report.Click Here To Get Funded!