Sunday, 16 Jun 2019

Asian tech stocks slide on Wall Street rout


TOKYO/SEOUL — Asian stock markets fell sharply Thursday following an overnight rout on Wall Street, as investors responded to rising interest rates in the U.S. and escalating trade tensions between Washington and Beijing.

Taking their cue from the U.S., technology shares in Asia plummeted, with SoftBank sliding 6.2% at one point, and China’s Tencent Holdings off 7.3%. Samsung Electronics lost 2.54% to 44,150 won in the morning, closing to a one-year low of 43,500 won.

Japanese stocks were among the worst performers. The Nikkei Stock Average fell more than 1,000 points. In early afternoon trade, the benchmark index stood at 22,505.01, down 1,001.03 or 4.3% from the previous close. The Nikkei is now off more than 7% from a 2018 high posted last week.

In Hong Kong, the Hang Seng Index was down 3.8% to mark a new low for the year, while in China, the Shanghai Composite Index declined 4.6% at one point to hit a four-year low.

In Taiwan, the Taiex fell more than 6%, also a year-to-date low, as investors sold off companies with heavy exposure to the U.S. market, such as major Apple Inc. supplier Hon Hai Precision Industry and Taiwan Semiconductor Manufacturing Co. (TSMC).

South Korea’s benchmark Kospi index was down 3.7%, the lowest level in more than a year. Other Asian markets also followed Wall Street lower. Singapore’s Straits Times Index and India’s SENSEX index were both down more than 2%.

Overnight, the Dow Jones Industrial Average fell 831.83 points, or 3.1%, to 25,598.74, its biggest drop since Feb. 8.

“The sharp sell-off in the U.S. has likely caught no one by surprise,” said Paras Anand, head of asset management for Asia Pacific at Fidelity International. “If anything, market participants have been wondering how, in the face of tighter money, a tighter labor market and rising oil prices, the U.S. has continued to be so resilient.”

The U.S. market sell-off mirrors an earlier correction in the Chinese and Hong Kong markets, which are already off more than 20% from this year’s peaks and in bear market territory, amid heightened trade tensions between the U.S. and China.

Risk-off sentiment is evident on the foreign exchange market as well, with the yen reaching a three-week high, although the reaction to the overnight sell-off has been more muted.

The dollar fell to 111.96 yen in late morning trade, compared with 113.09-09 at 5 p.m. in Tokyo on Wednesday, before recovering 112 in early afternoon. Stronger demand for yen indicates that investors have less appetite for assets denominated in dollars and other foreign currencies.

Fidelity analysts warned against excessive pessimism, however. “Importantly, the long-term fundamental story for Asia led by rising domestic consumption remains unchanged,” they said. “We continue to see many opportunities in China and selectively in ASEAN — quality companies that are exposed to the domestic economy and consumption, insurance and health care.”

Kim Jaewon, Nikkei staff writer contributed to this story.


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