Asian markets struggle as China Covid worries build

HONG KONG - Growing fears about China's latest Covid-19 outbreaks rattled investors, who fear authorities will revert to highly restrictive containment measures that have already dealt a chilling blow to the world's number two economy this year.

After starting November with a rally thanks to easing inflation concerns and signs China was edging towards a looser approach to the disease, the optimism has been given a massive jolt since the country announced its first virus deaths in six months.

They come as infections rise across the country, with residents in Beijing worried that leaders will introduce lockdown measures similar to those seen earlier in the year in Shanghai, which lasted for months.

The flare-ups come just a week after China said it would begin rolling back some of the strict Covid rules that have been in place since the pandemic started in 2020, even as the rest of the world has moved on.

Analysts said the latest developments highlight the long road ahead for China in emerging from the crisis as President Xi Jinping sticks solidly to a zero-Covid strategy that is widely blamed for the country's economic troubles.

"Risk sentiment has been under pressure on questions around China reopening," said SPI Asset Management's Stephen Innes.

"Some investors are convinced that China's reopening is a formality and will be catalysed by the (World Health Organization) downgrading Covid to an endemic.

"We know that China's reopening will be laced with fits and starts as the two-step-forward-one-step-back routine becomes the norm."

Hong Kong, which thundered more than 10 percent higher in a three-day surge earlier this month, fell for a fifth straight day, while Shanghai was also lower along with Seoul, Taipei and Wellington.

Still, there were gains in Tokyo, Sydney, Singapore, Manila and Jakarta.