Asian shares fall on US friction with China, Hong Kong fears

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A woman wearing a face mask walks past a bank's electronic board showing the Hong Kong share index at Hong Kong Stock Exchange Thursday, May 21, 2020. Asian stock markets are mixed after Wall Street rose amid Chinese trade tension with Washington and Australia. Investors looked ahead to Fridays meeting of Chinas legislature for details of possible new steps by Beijing to stimulate its virus-battered economy.(AP Photo/Vincent Yu)

Shares slipped in Asia on Friday as tensions flared between the U.S. and China and as more job losses compounded the economic fallout from the coronavirus pandemic.

Hong Kong’s benchmark led regional losses, dropping 3.9% to 23,332.78 after the central government in Beijing said China’s ceremonial parliament will consider a bill that could limit opposition activity in the former British colony.

Mass protests in the southern Chinese financial hub grew increasingly violent last year and only abated somewhat as the city fought off the coronavirus pandemic. Authorities have since cracked down on dissent, arresting some of Hong Kong's veteran pro-democracy figures alleging they were behind the demonstrations that largely were driven by young students.

“Traders around the world are playing the waiting game to see details of the new Hong Kong law to gauge how severe the terms are," Stephen Innes of AxiCorp said in a commentary.

More specifically, he said, will be the U.S. response to the possible impact on Hong Kong’s special economic status. Under the terms of Britain's handover of control of the territory to Beijing, the city kept its own trade regime and finances and a legal system based on western-style civil liberties that are denied to people living in other parts of China.

Shanghai's Composite index fell 1.4%, to 2,828.62 despite a promise by Chinese Premier Li Keqiang, the top economic official, to spend more to help revive the country's economy and curb surging job losses from the pandemic.

Li told the opening session of the national legislature that Beijing would set no economic growth target in order to focus on fighting the disease. He warned in his annual report to lawmakers that the battle against the pandemic isn't over and urged the country to “redouble our efforts” to revive slumping economic growth.

In other regional markets, Japan's Nikkei 225 index fell 20,462.11 and the Kospi in South Korea lost 1.4% to 1,969.77. In Australia, the S&P/ASX 200 declined 0.5% to 5,525.30. Shares also fell in Southeast Asia and Taiwan.