The major Asia-Pacific stock indexes closed higher on Monday, however, the trade was largely subdued, after China’s move to impose a new security law on Hong Kong heightened concerns about the future stability of the city and global trade prospects. Volume was light with the U.S. stock market closed due to the Memorial Day holiday.
On Monday, Japan’s Nikkei 225 Index settled at 20741.65, up 353.49 or 1.73%. Hong Kong Hang Seng Index closed at 22952.24, up 22.10 or +0.10% and South Korea’s KOSPI Index finished at 1994.60, up 24.47 or 1.24%.
China’s Shanghai Index settled at 2817.97, up 4.20 or +0.15% and Australia’s S&P/ASX 200 index closed at 5615.60, up 118.60 or +2.16%.
Hong Kong Residents Protest
Investors were rattled on Friday when Beijing unveiled details of the security legislation that critics see as a turning point for the former British colony.
The proposal drew the ire of Hong Kong residents who defied social distancing rules and protested on streets while the United States warned China’s move could lead to U.S. sanctions.
The U.S. Commerce Department responded by adding 33 Chinese companies and other institutions to a blacklist for human rights violations and to address U.S. national security concerns, Reuters reported.
China Threatens to Take Action if US Undermines Its Interests in Hong Kong
China warned on Monday that it will take countermeasures if the United States insists on undermining its interests regarding Hong Kong, following the latest comments from Washington about possible sanctions over new national security legislation for the city.
Chinese foreign ministry spokesman Zhao Lijian told reporters during a briefing that the United States is trying to harm China’s national security and said Beijing has lodged stern representations with Washington over White House National Security Adviser Robert O’Brien’s comments that the security law for Hong Kong could lead to U.S. sanctions.
National Security Adviser O’Brien said on NBC’s “Meet the Press” Sunday that the U.S. government will likely impose economic sanctions on Hong Kong and China if Beijing moves ahead with a proposed national security law for Hong Kong that could constrain the special region’s autonomy.
Japan’s Nikkei Jumps on Fresh Stimulus Hopes
Japan’s Nikkei jumped 1.7% after the Nikkei newspaper reported the country was considering a fresh stimulus package worth more than $929 billion that will consist mostly of financial aid programs for companies hit by the coronavirus pandemic.
In other news, Prime Minister Shinzo Abe will lift the state of emergency for the coronavirus pandemic in Tokyo and four other prefectures on Monday, Kyodo News reported. It added that Abe is expected to hold a press conference to explain his government’s plan, which would ease restrictions on economic activity.
Australian Shares Jump to 11-Week High as Travel Stocks Rebound from Coronavirus
Australian shares jumped to their highest value in almost three months as optimistic investors focused on the COVID-19 economic recovery, rather than US-China tensions.
Travel stocks skyrocketed after Treasury Josh Frydenberg raised the possibility that more stimulus could be on the way for the ailing sector.
“The tourism sector could be one sector in need of further support,” he told ABC News Breakfast. “That’s what we’ll look at in the context of the economic situation at the time. You’ll continue to see our international borders closed for some time.”
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire