Hong Kong plunges more than 5% as Beijing plans to impose new security laws

Stocks in Asia Pacific fell in Friday afternoon 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 plummeted 5.5%, as of its final hour of trading.

China is poised to impose a new national security law on Hong Kong after months of anti-government protests in the Chinese-ruled city. The move has sparked concerns that Beijing is tightening its grip on Hong Kong, and there are worries it could trigger another wave of pro-democracy protests.

The draft law was announced at the annual National People’s Congress (NPC), the Chinese parliament, which kicked off on Friday. The laws would reportedly ban secession, foreign interference, terrorism and all seditious activities aimed at toppling the central government and any external interference in the former British colony.

Acknowledging that the development was a “source of concern,” OCBC Bank’s Vasu Menon told CNBC’s “Street Signs” that the last few years have shown that political developments “don’t have a significant impact” in the medium to long term unless they result in an economic impact.

Mainland Chinese stocks also declined, with the Shanghai composite down more than 1% while the Shenzhen component shed 2.22%. Elsewhere, the Nikkei 225 in Japan closed 0.8% lower at 20,388.16 while the Topix index ended its trading day 0.9% lower at 1,477.80. Over in South Korea, the Kospi fell 1.41% to close at 1,970.13.

Shares in Australia also declined, with the S&P/ASX 200 closing 0.96% lower at 5,497. Overall, the MSCI Asia ex-Japan index dropped 2.68%.

Hong Kong plunges more than 5% as Beijing plans to impose new security laws, CNBC, May 22