Asian Stocks Fall as Equities in Hong Kong, Seoul Join Selloffby
Hang Seng Index caps worst start to lunar new year since 1994
India's Sensex index slumps to head toward bear market
Asian stocks fell as markets in Hong Kong and Seoul joined a global selloff in their first day of trading this week, with the Hang Seng Index capping its worst start to a lunar new year since 1994.
The MSCI Asia Pacific Excluding Japan Index dropped 1.7 percent as of 8:40 p.m. in Hong Kong. Markets in mainland China, Japan, Taiwan and Vietnam are closed for holidays. The Hang Seng Index slumped 3.9 percent in Hong Kong, while South Korea’s Kospi index tumbled the most since May 2012. A gauge of worldwide equities slid 2.3 percent in the first three days of the week amid concern about the outlook for the global economy and as oil extended its slide.
“We’re seeing a contagion from what’s been going on in the last three days in global markets,” Tim Condon, head of Asian research at ING Groep NV in Singapore, said by phone. “This is the first day South Korea and Hong Kong are registering a sort of reaction to that. It’s a huge down day. Financial markets are repricing for a global growth slowdown. Expectations that monetary policy would be able to do much have diminished considerably.”
Federal Reserve Chair Janet Yellen on Wednesday highlighted uncertainty over the pace of China’s growth and the related rout in commodities, concerns that have roiled financial markets throughout the year and twice pushed global shares to the brink of a bear market. Yellen told Congress the Fed still expects to raise rates gradually while making it clear that continued market turmoil may alter its forecasts. Her dovish-sounding comments weren’t enough to boost U.S. equities.
The Hang Seng China Enterprises Index of mainland shares listed in Hong Kong slumped 4.9 percent to the lowest close since March 2009 on Thursday.
The Kospi index traded for the first time since North Korea launched a long-range rocket on Feb. 7. South Korea is pulling out of an industrial complex jointly run with North Korea, taking aim at their last remaining symbol of economic cooperation. After the stock market closed, the official Korean Central News Agency reported that the North Korean military has taken control of the Gaeseong complex.
New Zealand’s S&P/NZX 50 Index lost 0.5 percent, while Singapore’s Straits Times Index slipped 1.7 percent. The Jakarta Composite Index climbed 0.9 percent. Australia’s S&P/ASX 200 Index advanced 1 percent, after falling into a bear market on Wednesday when it plunged to its lowest level since July 2013.
India’s S&P BSE Sensex dropped 3.4 percent, heading for its lowest close since May 2014. The gauge has slumped 23 percent from its January 2015 peak, the level some traders define as a bear market. Markets from Europe to Japan and China have already fallen into this category.
Energy shares led losses on the regional gauge, with Cnooc Ltd., China’s largest offshore oil company, dropping 5.3 percent in Hong Kong. Fortescue Metals Group Ltd., the world’s fourth-biggest iron ore producer, slipped 2.6 percent in Sydney after BMI Research cut the price outlook for the raw material used in making steel. HSBC Holdings Plc dropped 5.4 percent to the lowest level since April 2009 in Hong Kong.
Markets in mainland China, Taiwan and Vietnam remain closed for the rest of the week, while those in Japan will resume trading on Friday.
E-mini futures on the Standard & Poor’s 500 Index fell 1.7 percent after the underlying U.S. equity benchmark index closed down less than 0.1 percent on Wednesday, with gains of as much 1.6 percent evaporating in the final hour of trading.
Crude oil futures declined 3.2 percent on Thursday, sliding below $27 a barrel, after dropping 15 percent the previous five sessions.