BENGALURU (May 22): Southeast Asian stock markets fell today as Sino-US tensions were exacerbated after China said it would impose new national security legislation on Hong Kong following last year's pro-democracy unrest. US President Donald Trump warned that Washington would react "very strongly" against China's attempt to gain more control over the former British colony.
"The very real threat now is the return of mass protests to the streets of Hong Kong, a downgrade in trade status with the US, and potentially an exit of large companies from the SAR (special administrative region)," said Jeffrey Halley, a senior market analyst of OANDA. "Overhanging this are concerns that China and the United States are about to engage in a new round of trade [war]. In all honesty, the timing could not be worse by China."
Adding to the downbeat mood, China abandoned its annual growth target for the first time and pledged more government spending as the Covid-19 pandemic hammered the world's second-biggest economy.
Trade-sensitive Singapore shares fell 2.2% to hit their lowest level since April 6. The index posted its third consecutive weekly loss. The region's second-largest lender Oversea-Chinese Banking Corp (OCBC) fell 4.5% and conglomerate Jardine Matheson Holdings dropped 4.2%. Thailand stocks closed 1.3% lower as energy stocks were weighed by a 5% plunge in oil prices. Still, the benchmark index posted its second consecutive weekly gain. The country extended its state of emergency over Covid-19 until the end of June to keep infections under control.
The Manila bourse ended 1.2% down, snapping three straight sessions of gains. The index dropped for a third consecutive week. Malaysian shares fell 1.1% after seven straight sessions of gains. For the week, the index clocked its biggest percentage gain since May 1. Financial markets in Indonesia were closed for a public holiday.