Asian Markets React Down to Rise in COVID-19 Cases in China

The fall of Asian indices continues for the second day in a row.Yesterday, the broad Chinese market experienced the biggest intraday crash since November 2008 Chinese Yuan/Ruble CNY/RUB₽17,616 -1,59% Buy DOLLAR/Ruble usd/RUB₽111,058 -2,67% Buy

Asian stock indexes collapsed in trading on Tuesday. The Hong Kong stock index Hang Seng fell by 6.63% to 18,235.48 points. The Shanghai Stock Exchange SSE Composite index fell at a low of 4.95% to 3063.96 points, Japanese benchmark Kospi lost 0.91% to close at 2621.53 points. This is evidenced by trading data.

As REUTERS notes, Asian markets are falling amid an increase in cases of covid-19 in CHINA. Today, the country reported 3.6 thousand new confirmed cases of CORONAVIRUS compared to 1.43 thousand on Monday. Investors believe that a new jump in infections will hurt the country's economic growth in the first quarter.

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“Now everyone is watching the situation in China and understand that this should affect production. China 's economic growth in the first quarter could be closer to zero than 5.5%. A chain reaction ensues. There is Ukraine, the risk of U.S. sanctions against China, and the rise in covid cases inside China – it all doesn’t look good,” said Hong Hao, HEAD of research at BOCOM International.

Investor confidence was also hit by the lack of progress in talks between Ukraine and RUSSIA and heightened tensions between China and the US ahead of the Fed's rate hike. According to Reuters, the US authorities have warned China against providing military or financial assistance to Russia, while tightening sanctions against Russian political leaders.

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“We wonder if the markets have reached the peak of bearish   sentiment. We know that there has been a lot of negative news and things could get worse in the future. Share prices have fallen significantly and it is not clear whether US regulators will make any decisions regarding US-listed Chinese papers,” said Jack Siu, chief investment officer of Credit Suisse China.

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Most investors are hesitant to invest in the Chinese market, according to a BLOOMBERG poll, even as Chinese paper prices have fallen to their lowest level in more than a decade. Some investors plan to keep their existing positions but do not plan to increase them.

On Monday, March 14, the Hang Seng China Enterprises index, which tracks the dynamics of shares of Chinese companies, fell by 7.74%, reaching 6,513.84 points at the moment. This fall was the strongest intraday collapse for Chinese stocks since November 2008.

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Investors and traders on the stock exchange, seeking to capitalize on a decrease in the value of assets. This strategy is applied to short positions (as opposed to "bulls").