Asian Stocks Decline as Chinese Market Regulator Vows to Crack Down on Abuses


HONG KONG (AP) — Asian stocks faced another day of decline on Monday, primarily led by Chinese shares, even after the market regulator in Beijing announced its commitment to crack down on abuses and protect small investors.

Chinese Shares Experience Volatility

The smaller market in Shenzhen experienced a significant drop of 5.4% initially, but it quickly rebounded and settled at a 1.7% decline. Similarly, the Shanghai Composite index also slipped over 2% before recovering some ground.

Market Measures to Counter Crimes

To combat market manipulation and malicious short selling, the China Securities Regulatory Commission declared its plans to reinforce enforcement measures. Moreover, efforts will be made to attract more medium and long-term funds into the market.

Investor Confidence Remains Unsettled

Despite recent measures, investor confidence continues to falter as money has been flowing out of the markets for several months now. The previous week witnessed Chinese stocks enduring their worst week in five years.

Former President Donald Trump’s remarks about potentially imposing tariffs of over 60% on imports of Chinese goods in case of re-election further dampened market sentiment. Additionally, a private-sector survey reported that China’s services sector grew at a slightly slower rate in January, with the purchasing managers’ index falling to 52.7 from December’s 52.9. A PMI above 50 indicates expansion compared to the previous month.

Market Updates

As of mid-afternoon on Monday, the Shanghai Composite index (CN: SHCOMP) was down by 1% at 2,702.19. Hong Kong’s Hang Seng (HK: HSI) remained flat at 15,523.59.

Other Asian markets experienced mixed performances, with Tokyo’s Nikkei 225 index (JP: NIK) rising by 0.5% to 36,354.16, while Australia’s S&P/ASX 200 (AU: XJO) declined by 0.9% to 7,625.90. South Korea’s Kospi (KR: 180721) also shed 0.9% to 2,591.31.

Outlook for U.S. Trading

Modest declines were observed in U.S. stock futures (ES00, -0.16% NQ00, -0.17%), while benchmark U.S. crude (CL.1, +0.14%) rose by 5 cents to reach $72.32 a barrel in electronic trading at the New York Mercantile Exchange. Brent crude (BRN00, +0.25%), the international standard, increased by 14 cents to $77.47 a barrel.

Exchange Rates

The U.S. dollar (DXY) decreased to 148.39 Japanese yen from 148.43 yen, while the euro (EURUSD, -0.07%) was valued at $1.0782, down from $1.0784.

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