Asian Shares Snap Eight-Day Win Streak as Reflation Trades Fade

  • Liquidity flowing back into bonds in ‘slight reversal’: KGI
  • Financials lead sell-off after rise in Treasury yields

Asian stocks retreated from a 21-month high after U.S. equities dropped the most since November’s presidential election amid concern that Donald Trump’s growth policies won’t pass Congress.

The MSCI Asia Pacific Index fell 1.4 percent as of 4:24 p.m. in Hong Kong. The biggest drop since Dec. 15 ended a streak of gains at eight sessions. Financial stocks were the biggest drag after Treasury yields slid for a fourth day and the yen gained for a seventh day. Real estate was the only group bucking the decline, with Hong Kong’s Henderson Land Development Co. rising after announcing a bonus share issue and profit that beat analyst estimates.

“The equity market has moved ahead of itself with liquidity coming out of bonds and driving stocks,” said Nicholas Teo, a trading strategist at KGI Securities Pte. in Singapore. “Now we are seeing a slight reversal with liquidity flowing back to bonds. People start talking about the end of reflation trades, but we need to see more indicators in the next few weeks.”

Anta Sports Products Ltd. slumped 8.1 percent in Hong Kong after announcing a share sale at an 8 percent discount to Tuesday’s close. Huaneng Power International Inc. fell 5.2 percent after profit missed expectations.

Japan’s Topix index lost 2.1 percent while the Hang Seng Index slipped 1.1 percent. Benchmark indexes in Australia and Singapore dropped more than 1 percent.

Other markets

  • Shanghai Composite -0.5%; Hang Seng China Enterprises Index -1.8%
  • South Korea’s Kospi -0.5%; Taiwan’s Taiex -0.5%
  • FTSE Bursa Malaysia KLCI -0.6%; Jakarta Composite Index -0.7%; Philippine Stock Exchange Index -0.9%
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