China Passed the Controversial Hong Kong Security Law

On Thursday, stocks in the Asia Pacific were mixed due to mounting tensions between the U.S. and China. Tensions affected investor sentiment.

Interestingly, Japenese stocks reached the best results among the major regional markets. For example, the Nikkei 225 added 2.32% to close at 21,916.31 as shares of index heavyweight Fast Retailing soared 3.7%. At the same time, the Topix index gained 1.8% to finish the trading day at 1,577.34.

Mainland Chinese stocks were mixed on the day, the Shanghai Composite rose 0.33% to about 2,846.22. In the meantime, the Shenzhen Component fell 0.273% to around 10,653.49.

Moreover, Hong Kong’s Hang Seng index dropped 1.11% as of its final hour of trading, with shares of the tech giant from China, Tencent fell 2.95%.

Australia’s S&P/ASX 200 jumped 1.32% to close at 5,851.10. The move came after Reserve Bank of Australia Governor Philip Lower stated that it is possible that the economic downturn will not be as severe as earlier expected.

South Korea’s Kospi index fell 0.13% to close at 2,028.54.

U.S. Secretary of State and U.S.-China relations

Investors are closely monitoring the situation to learn more about the rising tensions between the U.S. and China.

On Wednesday, U.S. Secretary of State Mike Pompeo stated that Hong Kong was no longer autonomous from China. This statement raised questions regarding Hong Kong’s favorable trade relationship with the U.S. and what will happen to this relationship. Moreover, another issue is the possibility of sanctions on Chinese officials.

Moreover, on Wednesday the House of Representatives passed legislation condemning China for the detention and torture of Uighur Muslims.

It is worth mentioning that on May 28 China’s parliament has backed security legislation for Hong Kong. The legislation will criminalize secession as well as subversion, terrorism, and activities by foreign forces that interfere in Hong Kong. This move could spark another round of protests