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Asia Stocks at 4-Year Low

Asia Stocks at 4-Year LowAsia Stocks at 4-Year Low

Asian stocks declined, with a regional measure falling to its lowest level in more than four years, as concern about China’s growth outlook continued to fan a global selloff.

The MSCI Asia Pacific excluding Japan Index tumbled 2.1% to 374.20 in Hong Kong, heading for its lowest close since October 2011, after sinking 7.1% last week. Markets in Tokyo are closed Monday for a holiday, Bloomberg reported.

Turmoil in China’s markets rippled around the world in the first week of 2016 as the securities regulator scrapped an equity circuit breaker after just four days and the central bank set a weaker yuan fix for eight days in a row, escalating fears of a global currency war.

“The market is concerned about China’s financial stability, with investors looking for more visibility about how the new foreign exchange regime is going to work,” Matthew Sherwood, head of investment strategy at Perpetual Ltd. in Sydney, which manages about $21 billion, said by phone. “People are also quite nervous about the Chinese economic outlook. China is certainly slowing on a very gradual path down. A lot of people are fearing a hard landing is in play, but that’s not our central scenario. There’s a lot of policy ammunition left in China.”

  Yuan Fix

China’s Shanghai Composite Index slid 1.5%, while the Hang Seng China Enterprises Index of mainland stocks traded in Hong Kong declined 3.2%. The offshore yuan erased early losses after China’s central bank kept the currency’s daily fixing stable for the second day in a row.

China’s consumer price index rose 1.6% in December from a year earlier, the National Bureau of Statistics said on Saturday. That followed a gain of 1.5% in November. The producer price index fell 5.9%, extending its record run of declines to 46 months.

Australia’s S&P/ASX 200 Index fell 1.9% and New Zealand’s S&P/NZX 50 Index lost 0.9%. South Korea’s Kospi index slipped 0.9%. Hong Kong’s Hang Seng Index sank 2.5%. Singapore’s Straits Times Index dropped 1.95 and Taiwan’s Taiex index slumped 1.8%.

E-mini futures on the Standard & Poor’s 500 Index dropped 0.6% on Monday after US stocks capped the worst start to a year on record last week.

The absence of Tokyo for a holiday only made liquidity even harder to come by, heightening volatility. Currency markets saw some wild swings with the South African rand collapsing to record lows at one point before bouncing.

Commodities remained on the ropes as Brent crude oil shed another 74 cents to $32.81 a barrel. US crude was quoted 71 cents lighter at $32.45.

Financialtribune.com