China's zero-COVID lockdown protests drag on Chinese and Hong Kong stocks as unrest spooks investors

• The eruption of COVID-19 lockdown protests in China are weighing on stocks in the mainland and in Hong Kong.
• Hong Kong's benchmark Hang Seng Index shed more than 4% at the open and closed 1.6% lower.

Stocks in mainland China and in Hong Kong closed lower Monday amid demonstrations across the country related to Beijing's stringent zero-COVID lockdown policies.

The Hang Seng Index in Hong Kong dropped as much as 4% early in the day before recovering to close at about 1.6% lower. Mainland China's CSI 300 index shed 1.1% on the day.

Meanwhile, China's yuan dropped against the dollar early in the day but regained some losses. The currency is trading at about 7.2 per dollar, and has lost roughly 13% against the greenback in 2022.

In the US, too, stocks opened lower as the protests spook investors around the world.

Demonstrations broke out across major cities including Beijing, Shanghai, and Wuhan over the weekend following an apartment fire in Urumqi that resulted in the death of 10 people.

On Saturday, a quiet vigil for the deceased turned into an angry protest that blasted zero-COVID policies. And in some cities, protesters have taken aim directly at President Xi Jinping.

Virus lockdowns have continued for nearly three years in the world's second largest economy, weighing heavily on growth.

The demonstrations could change the government's policy path moving forward, some experts say, but China also reported a record number of COVID-19 cases recently.