Asia stocks hit by China COVID risk, Berkshire buying helps Japan

© Reuters.

By Ambar Warrick

Investing.com-- Most Asian stocks tumbled on Monday, with Chinese markets losing the most as a record-high jump in COVID cases dented sentiment, although Japan’s main index traded flat as hedge fund Berkshire Hathaway raised its stake in the country’s top trading houses.

China’s blue-chip Shanghai Shenzhen CSI 300 index slumped 1.3%, while the Shanghai Composite index lost 0.8% as several cities in the country logged record-high spikes in daily COVID-19 cases.

This also saw the introduction of new lockdown measures in several economic hubs, including Beijing and Shanghai.

The rising caseload, coupled with a series of weak Chinese economic readings last week drove speculation over a renewed slowdown in the country, which bodes poorly for countries with heavy trade exposure to Beijing. Hong Kong’s Hang Seng index plummeted 2%, extending losses into a fourth straight session.

South Korea’s KOSPI index fell 1.2%, while Australia’s S&P/ASX 200 index lost 0.1%. Rising COVID-19 cases in China undercut recent optimism over the potential scaling back of the country’s strict zero-COVID policy, despite an increasing amount of public ire towards the policy.

Japan’s Nikkei 225 index fell the least among its peers on Monday, after billionaire Warren Buffet’s Berkshire Hathaway (NYSE:BRKa) raised its stake in the country’s five biggest trading houses.

Shares of Mitsubishi Corp. (TYO:8058), Mitsui & Co., Ltd. (TYO:8031), Itochu Corp. (TYO:8001), Marubeni Corp. (TYO:8002), and Sumitomo Corp. (TYO:8053) jumped between 0.3% and 2.4% after the world’s largest hedge fund upped its holdings in each firm by at least 1%.

Shares of the five trading houses have vastly outperformed the Japanese benchmark this year, logging double-digit gains while the Nikkei fell 3%.

Broader Asian markets fell amid jitters over China. Uncertainty over the path of U.S. monetary policy also weighed on regional assets, as investors awaited more cues from the minutes of the Federal Reserve’s November meeting due later this week.

While the central bank is expected to raise interest rates by a relatively smaller 50 basis points in December, some Fed officials warned that it could raise interest rates for longer than expected. Such a scenario is expected to be negative for Asian stocks, which logged heavy losses this year as the central bank began raising rates sharply.

Malaysian stocks fell the most in Southeast Asia, down 1.4% amid uncertainty over the outcome of the country’s recent general election. While former Prime Minister Muhyiddin Yassin said his party has enough votes to form a government, the election commission said Malaysia faces its first hung parliament in history.