Japan's Nikkei sinks as China COVID worries weigh; tech shares slide

28 Nov 202203:17 UTC

Japan's Nikkei share average slid for a second day on Monday, as protests in China over renewed COVID-19 clampdowns hurt investor sentiment, while tech stocks fell in line with Wall Street peers.

The Nikkei NI225 ended the morning session down 0.62% at 28,107.79, extending its 0.35% decline from Friday, as the benchmark index retreated from a more than two-month high of 28,502.29 hit the day before.

Of the Nikkei's 225 components, 191 fell versus 23 that rose and 11 that were flat.

The broader Topix TOPIX sank 0.79%.

Early declines for Japanese stock indexes accelerated after Chinese equity markets opened sharply lower, with Hong Kong's Hang Seng tumbling as much as 4.2% at one point.

A wave of protests unprecedented under Xi Jinping's rule has swept China, including clashes with police in Shanghai, after the government doubled down on pandemic restrictions amid a surge in COVID cases.

"This news is definitely a negative for Japanese stocks, especially the tech sector, which has large exposure to Chinese markets and supply chains," said Kenji Abe, an equity strategist at Daiwa.

"A slowdown in the Chinese economy will have a big impact on the Japanese stock market."

Tech stocks were already under pressure after a slump in Apple AAPL on Friday following a report that COVID restrictions would further cut output at its flagship iPhone factory in China. The Philadelphia SE Semiconductor Index SOX also sagged 1.26%.

Chipmaking equipment makers Tokyo Electron 8035 and Advantest 6857 dropped 1.56% and 0.64% respectively.