Japan's Nikkei slips amid China COVID worries; tech shares slide

28 Nov 202206:41 UTC

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

The Nikkei NI225 ended the day down 0.42% at 28,162.83. The index closed 0.35% lower on Friday after hitting a more than two-month high in the session before.

Of the Nikkei's 225 components, 173 fell, 45 rose and seven closed flat.

The broader Topix TOPIX sank 0.68%.

Selling in Japanese stocks accelerated after Chinese and Hong Kong equity markets opened sharply lower, with the Hang Seng index tumbling 4.2% at one point. However, both the Nikkei and Topix indexes ended the day well off their lows.

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 to contain 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 Apple AAPL fell sharply 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% on Friday.

Chipmaking equipment makers Tokyo Electron 8035 and Advantest 6857 dropped 1.56% and 0.54%, respectively.