SHANGHAI: China stocks saw their worst day in seven weeks on Monday, as concerns over surging COVID-19 cases disrupting economic activity outweighed hopes from the government’s policy support.
The blue-chip CSI 300 Index lost 1.5% at close, while the Shanghai Composite Index plunged 1.9%. Both indexes logged their biggest daily drop since Oct. 28.
Hong Kong’s Hang Seng Index and the Hang Seng China Enterprises Index lost 0.5% each.
China reported its first COVID-related deaths in weeks on Monday since strict prevention protocols started to be dismantled earlier this month.
China is in the first of an expected three waves of COVID cases this winter, the country’s chief epidemiologist said, adding further waves will come as people return en masse to their home areas for the Lunar New Year holiday next month.
Healthcare stocks slumped 3.8% to lead the decline, shares in energy, semiconductors and infrastructure dropped between 2.3% and 3%.
CICC analysts said recent correction in the market is due to COVID outbreaks and profit-taking following rebounds, while predicting more volatility in the coming months as economic activity will continue to be disrupted by the COVID.
China will focus on stabilising its economy in 2023 and step up policy adjustments to ensure key targets are hit, said a statement following the annual Central Economic Work Conference(CEWC).
The country should better coordinate epidemic prevention and control, and economic and social development, it added.
“Other than reiterating support for private businesses, the CEWC statement sounded more positive about the role of internet platforms, a clear sign that the regulatory storms that damaged market sentiment in recent years are giving way to normalised regulation,” said Standard Chartered analysts in a note.
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