Hong Kong plunges nearly 3% following reports of Beijing’s plans for new security laws

Stocks in Asia Pacific were lower in Friday morning trade as tensions between the U.S. and China rise.

Hong Kong’s Hang Seng index led losses among the region’s major markets as it fell 2.84% in early trade. The moves came after reports surfaced Thursday that China is planning national security laws for Hong Kong, after the city was plunged into turmoil by pro-democracy protests last year that periodically degenerated into violence.

Mainland Chinese stocks also edged lower, with the Shanghai composite down 0.4% while the Shenzhen composite shed 0.376%.

Elsewhere, the Nikkei 225 in Japan slipped 0.22% in morning trade while the Topix index was 0.27% lower. Over in South Korea, the Kospi fell 0.85%.

Shares in Australia also declined, with the S&P/ASX 200 fractionally lower.

Overall, the MSCI Asia ex-Japan index traded 1.19% lower.

China: No 2020 GDP target

China said it will not set a GDP target for 2020.

“I would like to point out that we have not set a specific target for economic growth this year,” Chinese Premier Li Keqiang said in an English-language text of the work report he was set to deliver on Friday. “This is because our country will face some factors that are difficult to predict in its development due to the great uncertainty regarding the covid 19 pandemic and the world economic and trade environment.”

That comes as tensions between Beijing and Washington have risen in recent days, over issues such as the coronavirus pandemic as well as a bill that was passed which could force Chinese firms to delist on U.S. exchanges.

“The temperature of US China tensions are rising and taking a bite out of risk sentiment everywhere, albeit only modestly so at this stage,” Ray Attrill, head of foreign exchange strategy at National Australia Bank, wrote in a note.

Overnight on Wall Street, the Dow Jones Industrial Average closed 101.78 points lower, or 0.41%, at 24,474.12. The S&P 500 slipped about 0.8% to end its trading day at 2,948.51 while the Nasdaq Composite was down nearly 1% to close 9,284.88.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 99.414 after seeing a decline this week from levels above 100.

The Japanese yen traded 107.58 per dollar, off lows around 108 seen earlier in the trading week. The Australian dollar changed hands at $0.6561 after touching levels above $0.658 yesterday.

Oil prices were lower in the morning of Asian trading hours, with international benchmark Brent crude futures down 0.25% to $35.97 per barrel. U.S. crude futures also edged 0.38% lower to $33.79 per barrel.

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