Asia report: Hang Seng enters correction territory amid fresh Covid concerns

Markets in Asia largely closed in negative territory on Wednesday, with Hong Kong’s benchmark sliding into correction territory, amid fresh concerns around the global Covid-19 pandemic.

In Japan, the Nikkei 225 was down 2.04% at 28,405.52, as the yen weakened 0.08% against the dollar to last trade at JPY 108.68.

Of the major components on the benchmark index, automation specialist Fanuc was down 1.04%, fashion firm Fast Retailing lost 3.53%, and technology conglomerate SoftBank Group plunged 4.45%.

The broader Topix index was 2.18% weaker by the end of trading in Tokyo, closing at 1,928.58.

On the mainland, the Shanghai Composite was off 1.3% at 3,367.06, and the smaller, technology-heavy Shenzhen Composite was down 1.41% at 2,166.75.

South Korea’s Kospi slipped 0.28% to 2,996.35, while the Hang Seng Index in Hong Kong was down 2.03% at 27,918.14.

That put the special administrative territory’s main board in correction territory, as it had weakened more than 10% from its 52-week high in February.

Shanghai Fosun Pharmaceutical Group lost 4.83%, after both Hong Kong and Macau said they were halting doses of the Pfizer-BioNTech Covid-19 vaccine.

Fosun is the development and distribution partner for the Pfizer-BioNTech vaccine in the greater China region.

The blue-chip technology stocks were weaker in Seoul, with Samsung Electronics down 0.98% and SK Hynix losing 1.11%.

Concerns around Covid-19 were once again at top of the agenda, after the World Health Organization warned earlier in the week that a number of more contagious variants were spreading further.

A number of economies in continental Europe have imposed fresh lockdowns, as a ‘third wave’ of the coronavirus appears to be emerging.

“The narrative behind these moves is that concern over vaccine rollouts and elevated infection rates in Europe is weighing upon recovery expectations,” noted analysts at Rabobank.

“The specific catalyst being looked at here is Germany’s announcement yesterday that it would be imposing a strict five-day lockdown over Easter.

“This may well be true but, to us, this seems an unsatisfying explanation given one of the key characteristics of the market’s reaction function over recent months has been its conspicuous ability to completely discount unfavourable developments on the virus front as it focuses solely and squarely on the eventual recovery.”

Oil prices were higher at the end of the Asian day, with Brent crude last up 1.86% at $61.92 per barrel, and West Texas Intermediate advancing 2.04% to $58.94.

In Australia, the S&P/ASX 200 went against the regional trend, managing gains of 0.5% to settle at 6,778.80, while across the Tasman Sea, New Zealand’s S&P/NZX 50 slipped 0.29% to 12,358.88.

Both of the down under dollars were weaker against the greenback, with the Aussie last off 0.09% at AUD 1.3125, and the Kiwi retreating 0.18% to change hands at NZD 1.4313.