Asia Stocks Fall on China COVID Protests, While India Stocks Near Records

On Monday, the bulk of Asian stock markets slumped owing to escalating protests in China against the government's strict zero-COVID policy, while Indian shares traded near record highs as markets anticipated slower interest rate increases in the country.

The Shanghai Shenzhen CSI 300 index fell 1.7%, while the Shanghai Composite fell 1.2%. The Hang Seng in Hong Kong declined 2.1%, the largest decline in Asia.

As discontent with the government's severe zero-COVID policy on movement and activity restrictions rose, protestors clashed with police in many major Chinese cities over the weekend. The recent, albeit exceptional, incident of civil disobedience was started by a devastating fire in the far west of the nation, which was reportedly aggravated by lockdown measures.

Due to record-high daily infection rates, China has imposed stringent restrictions in a number of major cities, causing considerable outrage. This gave rise to concerns that the Chinese economy might soon confront stronger headwinds and risk a potential decline.

Upon hearing this, additional China-exposed markets discontinued their participation. South Korea's KOSPI index plummeted 1.1%, while Taiwan's Weighted index sank 1.2%. After President Tsai Ing-wen resigned as leader of the ruling party following the party's defeat in local elections last week, Taiwanese stocks likewise dropped.

Australia's S&P/ASX 200 index fell 0.4%, while Japan's Nikkei 225 index fell 0.5%. On Monday, demand for safe havens such as the dollar increased.

Indian shares defied the trend and traded around record highs as expectations mounted that the Reserve Bank of India will hike interest rates by a lesser margin in the coming months.

In October, it appeared that India's inflation had dramatically slowed, lessening the need for rate hikes.

The benchmark Nifty 50 index and the blue-chip Nifty 50 index both gained by 0.2%. Both indexes were trading around all-time highs, with extra support coming from the Federal Reserve's dovish indications from the previous week.

Despite a falling currency and challenges from commodities markets, the International Monetary Fund projects that the Indian economy would be among the top-performing economies in 2022, with a 6.8% growth rate.

Moreover, Philippine stocks excelled, advancing 1% after gaining the highest among regional peers the week prior.

In expectation of fewer rate rises by the U.S. Federal Reserve, the bulk of Asian stocks climbed during the last two weeks.