Asian stock markets slumped on Monday as China’s central bank maintained its benchmark lending rates, or loan prime rates, in line with expectations, as well as concerns that Beijing may tighten Covid regulations following the country’s first Covid-related death in over six months.
As of 9.27 A.M. (Thai time), the Hang Seng index in Hong Kong fell sharply 3.01%, leading to losses in the wider region. In mainland China, the Shanghai Composite dropped 1.23%.
The Nikkei 225 in Japan slid 0.15%. In Australia, the S&P/ASX 200 was 0.21% lower. South Korea’s Kospi dropped 1.33%.
Chinese banks held their benchmark lending rates steady for a third month after the central bank kept its key rates unchanged last week and showed increased concern about the inflation outlook.
According to a statement issued by the People’s Bank of China on Monday, the one-year loan prime rate remained at 3.65%. Bloomberg polled predicted that the rate will remain unchanged.
The five-year rate, which is used as a benchmark for mortgages, was also held steady at 4.3%, in line with the majority of projections in the survey.
Over the weekend, China saw its first Covid-related death in almost six months. A city near Beijing that was reported to be a test case for China lifting virus restrictions has closed schools, shut down universities, and ordered residents to stay at home for five days.
The markets will be looking beyond Asia this week to the minutes from the most recent Federal Reserve policy meeting for additional hints on the path of rate hikes.