Asia Stocks Fall to Lowest Since 2011, Extending Global Selloff

Updated on
  • Australian shares drop as Japanese markets closed for holiday
  • Markets in mainland China and Hong Kong resume declines

China Credit Crisis Lurks Beneath Turbulence: Magnus

Asian stocks declined, with a regional measure falling to its lowest level in more than four years, as concern about China’s growth outlook continued to fan a global selloff.

The MSCI Asia Pacific excluding Japan Index tumbled 2 percent to 374.51 as of 4:04 p.m. in Hong Kong, heading for its lowest close since October 2011, after sinking 7.1 percent last week. Markets in Tokyo are closed Monday for a holiday. Turmoil in China’s markets rippled around the world in the first week of 2016 as the securities regulator scrapped an equity circuit breaker after just four days and the central bank set a weaker yuan fix for eight days in a row, escalating fears of a global currency war.

“The market is concerned about China’s financial stability, with investors looking for more visibility about how the new foreign exchange regime is going to work,” Matthew Sherwood, head of investment strategy at Perpetual Ltd. in Sydney, which manages about $21 billion, said by phone. “People are also quite nervous about the Chinese economic outlook. China is certainly slowing on a very gradual path down. A lot of people are fearing a hard landing is in play, but that’s not our central scenario. There’s a lot of policy ammunition left in China.”

Yuan Fix

China’s Shanghai Composite Index slumped 5.3 percent to the lowest close in almost four months, while the Hang Seng China Enterprises Index of mainland stocks traded in Hong Kong declined 3.9 percent. The offshore yuan erased early losses after China’s central bank kept the currency’s daily fixing stable for the second day in a row.

The stock market’s extreme market swings this year and a sliding yuan have revived concern over the Communist Party’s ability to manage an economy set to grow at the weakest pace since 1990. China’s consumer price index rose 1.6 percent in December from a year earlier, the National Bureau of Statistics said on Saturday. That followed a gain of 1.5 percent in November. The producer price index fell 5.9 percent, extending its record run of declines to 46 months.

South Korea’s Kospi index and Australia’s S&P/ASX 200 Index both fell 1.2 percent. New Zealand’s S&P/NZX 50 Index lost 0.9 percent. Hong Kong’s Hang Seng Index sank 2.8 percent. Singapore’s Straits Times Index dropped 2.1 percent. Taiwan’s Taiex index slipped 1.3 percent.

Bear Market

The Philippine Stock Exchange Index tumbled 4.4 percent, entering a bear market after losing 23 percent from its record high in April, amid a selloff by foreign investors. Port operator International Container Terminal Services Inc. tumbled 9 percent, pacing losses among the nation’s biggest companies.

“It’s Halloween in January -- The red flags are all there for investors to realign their portfolios,” Astro del Castillo, managing director at First Grade Holdings Inc., said in Manila. “The sentiments are overwhelmingly negative that a bear market is inevitable.”

BHP Billiton Ltd., the world’s biggest mining company and Australia’s largest oil explorer, decreased 4.9 percent in Sydney as copper slumped and crude oil extended its slide from an 11-year low. Noble Group Ltd. sank 5.9 percent in Singapore even as Chairman Richard Elman stepped up his defense of the commodity trader that he founded by boosting his stake. Hermes Microvision Inc. slumped 10 percent in Taipei after Yuanta Securities Co. downgraded its rating for the maker of semiconductor inspection equipment.

E-mini futures on the Standard & Poor’s 500 Index fluctuated on Monday after the underlying gauge sank 6 percent last week. Concern about China’s market turmoil overshadowed a Labor Department report on Friday showing that employers added 292,000 workers to payrolls in December, exceeding the highest estimate in a Bloomberg survey and putting the gain for all of 2015 at 2.65 million.