COVID-19 New Variant Dampens Asian Stock Markets... Japan's Nikkei Sees Largest Drop in 5 Months

[Asia Economy Reporter Seulgina Jo] Major Asian stock markets including South Korea, Japan, and China closed lower on the 26th following news of a new COVID-19 variant that could be more potent than the Delta variant. Concerns that the new variant might render existing vaccines ineffective have caused investor sentiment to freeze. The World Health Organization (WHO) has convened an emergency meeting.

According to Bloomberg News and others, Japan's Nikkei 225 average closed at 28,751.62, down 2.53% from the previous session. This marks the largest decline since June 21. The TOPIX index also closed at 1,984.98, down 2.01% from the previous session.

Nihon Keizai Shimbun reported that "the psychological support level of 29,000 has been broken."

This downward trend is interpreted as a result of weakened investor sentiment following reports of a powerful COVID-19 variant ‘Nu (B.1.1.529)’ discovered in South Africa. Kyodo News stated, "Amid concerns over the reintroduction of lockdown measures due to rising COVID-19 cases in Europe and other regions, reports of the new variant have acted as a negative factor, further increasing uncertainty surrounding the global economic recovery."

The South African Ministry of Health officially confirmed the variant on the 25th (local time), noting that it has 32 spike protein mutations, double that of the Delta variant’s 16. The WHO is currently monitoring the new variant and plans to hold a special meeting on the 27th to discuss its potential impact on current vaccines and treatments.

Meanwhile, on the Tokyo Stock Exchange, SoftBank’s stock price plunged 5.19%, leading the overall decline. SoftBank’s shares dropped sharply following reports that Chinese authorities demanded the delisting of Didi Chuxing, in which SoftBank holds a significant stake, from the New York Stock Exchange.

South Korea’s stock market was also unable to escape the impact of the new COVID-19 variant. The KOSPI closed at 2,936.44, down 1.47% from the previous session. The KOSDAQ ended at 1,005.89, down 0.95%.

China’s Shanghai Composite Index and Shenzhen Composite Index fell by 0.56% and 0.20%, respectively. Taiwan’s TAIEX dropped 1.61% to close at 17,369.39. Hong Kong’s Hang Seng Index was trading down 2.62% from the previous session during the afternoon session.