Omicron Spread and Concerns Over China’s Economic Slowdown... Asian Stock Markets Fall Simultaneously

Citizens of London Crowded at COVID-19 Vaccination Sites Amid Omicron Spread
[Image Source=Yonhap News]

[Asia Economy Reporter Song Seung-seop] Asian stock markets fell simultaneously on the 20th due to concerns over the spread of the new COVID-19 variant Omicron and the Chinese economy.

According to major foreign media, Japan's Tokyo Stock Exchange Nikkei 225 average dropped sharply by 2.13% that day. China's Shanghai Composite Index (-1.07%) and Shenzhen Composite Index (-1.77%) also showed a downward trend. South Korea's KOSPI (-1.81%) and Taiwan's TAIEX (-0.81%) followed suit.

This is believed to be due to the spread of the Omicron variant. As COVID-19 cases increased across Europe and the United States, including the Netherlands declaring a nationwide lockdown, investor sentiment deteriorated.

The People's Bank of China's decision to cut the 1-year Loan Prime Rate (LPR) also heightened investment anxiety. It signaled to the market that China's growth has slowed enough to warrant a rate cut. On that day, the People's Bank of China lowered the rate from 3.85% to 3.80%, a 0.05 percentage point decrease. This was the first cut in 20 months since April last year.

Meanwhile, central banks of major countries worldwide, excluding China, are shifting toward monetary tightening policies. Recently, the Bank of England (BOE) became the first major central bank to raise interest rates since the COVID-19 pandemic.