Banks Lead Asian Stocks Lower Amid Lingering North Korea Risks

  • Recruit, Japan Post jump on addition to Nikkei 225 Average
  • Chinese lenders slide on North Korea-related sanctions risk

Asian shares dropped as banks led declines from Seoul to Hong Kong, while North Korea again dominated headlines.

The MSCI Asia Pacific Index fell 0.2 percent to 160.21 as of 4:33 p.m. in Hong Kong, erasing Tuesday’s gains. Japan’s Topix closed 0.1 percent higher after reversing an early decline. Hong Kong’s Hang Seng Index dropped 0.5 percent, with financial and property companies among the biggest losers.

Russian President Vladimir Putin joined China in rejecting U.S. calls for new sanctions against North Korea after its sixth and most powerful nuclear test Sunday. Traders are pricing in the region’s geopolitical risks and taking profits ahead of China’s twice-a-decade congress, set to start on Oct. 18, and reshuffle of top leadership.

“The selloff on North Korea will gradually taper off, as investors generally believe that a war is unlikely,”said Nelson Yan, a Hong Kong-based executive director at CCB Securities Ltd. “People will pay more attention to China’s upcoming congress in the following weeks.”

Bank of China Ltd. fell 0.7 percent in Hong Kong as U.S. President Donald Trump’s sanctions threat may put pressure on some Chinese lenders with North Korean ties. Industrial & Commercial Bank of China Ltd. slid 1 percent for a two-week low. South Korea’s DGB Financial Group Inc. declined 1.8 percent after the nation’s banks were downgraded by Nomura Holdings Inc.

In Tokyo, Recruit Holdings Co. surged 7.8 percent and Japan Post Holdings Co. gained 1.9 percent following the announcement that they will be added to the Nikkei 225 Stock Average next month.

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