World Economy

Asian Stocks Hit 4-Month Low

Asian Stocks Hit 4-Month LowAsian Stocks Hit 4-Month Low

Asian stocks stumbled to a four-month low on Monday as political unrest in Hong Kong rattled investors. Hong Kong shares dropped 2.3 percent to three-month lows in the worst unrest since two decades ago.

Asia, however, failed to ride on Wall Street’s performance, with the MSCI’s broadest index of Asia-Pacific shares outside Japan dropping 1.3 percent, hitting its lowest level since mid-May, Reuters reported.

Even the usually calm Hong Kong-dollar, which is pegged to a narrow band against the US dollar, slipped 0.1 percent to 7.761 against the greenback, its lowest level since March, as the street clashes affected some banks’ operations.

“We consider the peg (to the US dollar) virtually unbreakable but (today’s fall in the spot price) is a warning that financial markets and the economy are vulnerable to political uncertainty,” said Tim Condon, Asia economist at ING.

Offshore yuan traded at 6.1545 to the dollar, slightly weaker than Friday but off the six-week low of 6.1787 hit earlier this month.

Markets in mainland China fared better, with Shanghai shares little changed near 1 1/2-year highs.

Japan’s Nikkei average also rose 0.5 percent, with the yen’s weakness flattering the export sector.

The dollar index rose as high as 85.779, its highest since July 2010, in early trade after having posted an 11th straight week of gains last week, extending the longest winning streak since its 1971 uncoupling from gold.


Against the yen, the dollar rose to six-year high of 109.74 yen. The Australian dollar dropped to as low as $0.8684, its lowest level in almost eight months and coming within sight of its January low of $0.8660. The New Zealand dollar also dropped to a one-year low of $0.7708 after Reserve Bank of New Zealand data showed that the central bank had sold the currency on the open market last month to accelerate its fall from historic highs.

The market is gripped by jitters that Pimco may sell more bonds if investors pull out funds from its flagship bond fund, the world’s biggest bond fund, after its chief investment officer Bill Gross left the company.

“Now that one of the biggest bond bulls in the market has stepped down from the helm, the market may be questioning what strategic direction PIMCO will take, particularly in regard to the new neutral credo,” analysts at Societe Generale said in report.

Elsewhere, copper futures price fell to three-month lows of $6,666.0 per ton, extending their losses on worries over an expected supply surge and weak demand from top consumer China.