Asian shares lose ground as Delta variant remains a concern

Investors are also unclear about China’s policies in dealing with the pandemic

Asian stocks gave away ground on Friday due to the spread of the Delta variant of the coronavirus raising concerns over the country’s economic recovery.

The move came as US stocks posted strong gains.

Investors are also unclear about China’s policies in dealing with the pandemic, creating a sense of hesitancy, especially after the CCP came down on the technology sector.

The MSCI Asia ex Japan index is down by 0.19% on Friday, while the CSI 300 index (Chinese blue chips) and KOSPI 200 Index (Korea) have lost 0.55% and 0.33% respectively.

“There are two main drivers of volatility in the market this week, firstly everything surrounding the Chinese regulatory drive…and secondly the severity of Delta outbreaks around the region,” Carlos Casanova, senior economist Asia at UBP, told Reuters.

“International investors are still wrapping their head around what happened in the education sector (in China). I expect that will continue to drive sentiment. The regulatory drive is not over yet, it should continue to be a factor in the next three to six months or so,” he said.

China today reported 124 confirmed new cases for 5 August, the country’s highest daily count for new cases in the recent outbreak.

Additionally, Malaysia and Thailand reported record daily cases on Thursday.

The MSCI world shares index is just short of an all-time-high as stock markets from other parts of the world take the load off of Asia.

Following a flurry of robust earnings announcements, the Nasdaq and S&P 500 closed at record levels yesterday, as eyes will now turn to the upcoming jobs report.

“Asian and emerging markets have gone from strength to strength,” says Kate Marshall, senior investment analyst at Hargreaves Lansdown. “Rapid industrialisation, growing populations, and a desire to succeed have helped transform developing countries into economic superpowers. Domestic consumption is set to be a key driver of growth over the coming years, helped by a young and growing population, and rising wealth.”

“These countries have also become hotbeds of innovation. Some countries are at the forefront of technology and many companies located there are overtaking Western competitors,” Marshall added.

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