Hong Kong's Hang Seng index drops 5% as investors monitor China's Covid wave

SINGAPORE — Shares in Asia-Pacific were mixed in Monday trade as investors monitor a Covid wave in China. Meanwhile, oil prices continued to be volatile amid the Russia-Ukraine war.

Hong Kong's Hang Seng index dropped 5%, with Chinese tech stocks taking a beating: Tencent fell 8.81%, Alibaba slipped 10.52% and Meituan plunged 16.32%. The Hang Seng Tech index tumbled more 10%.

Mainland Chinese stocks closed lower, with the Shanghai composite down 2.6% to 3,223.53 while the Shenzhen component shed 3.083% to 12,063.63.

China is undergoing a wave of Covid infections, including the major city of Shenzhen.

"China is experiencing the largest wave of COVID since the end of national lockdown in March 2020," ANZ Research's Raymond Yeung and Zhaopeng Xing wrote in a Monday note.

"If the lockdown is extended, China's economic growth will be significantly affected. It is too early for us to change our GDP growth forecast (5.0%) for 2022 , but we are wary of the impact of a partial lockdown in the economically rich provinces," they said.

Shares of Hon Hai Precision Industry, also known as Foxconn, slipped 0.97% as the major Apple supplier announced Monday it has suspended operations in China's Shenzhen city to comply with local Covid restrictions, according to Reuters. Taiwan's Taiex finished the trading day little changed at 17,263.04.

South Korea's Kospi also dipped 0.85%.

In Japan, the Nikkei 225 climbed 0.58% to close at 25,307.85 while the Topix index advanced 0.71% to 1,812.28. The S&P/ASX 200 in Australia gained 1.21% to 7,149.40.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.93%.

Investors continued watching developments on the Russia-Ukraine war, which is disrupting shipping and air freight.

Oil prices fell in the afternoon of Asia trading hours, with international benchmark Brent crude futures down 2.98% to $109.31 per barrel. U.S. crude futures shed 3.37% to $105.65 per barrel.

Oil prices during the Russia-Ukraine conflict have spiked to record levels but fell back last week on supply hopes, before rising again to close out the week. Over in Asia, China, India, Japan and South Korea are all major importers of oil, according to 2020 data from the International Energy Agency.

The U.S. Federal Reserve is widely expected to announce a rate hike later this week, the first such move since 2018.

In Asia, the Bank of Japan is also set to announce its monetary policy decision later in the week.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 99.184 after its recent bounce from below 98.

The Japanese yen traded at 117.77 per dollar after last week's weakening from below 116 against the greenback. The Australian dollar was at $0.7241 after slipping from above $0.732 late last week.