Asia markets sank Thursday, as fresh worries about Spain and Italy sparked fears of a deteriorating situation in Europe, and rising global uncertainty saw investors dump risk assets.
Japan’s Nikkei Stock Average JP:100000018 -1.84 percent gave up 1.9 percent, while South Korea’s Kospi KR:SEU -1.30 percent dropped 1.3 percent, and Australia’s S&P/ASX 200 index AU:XJO -0.87 percent lost 1.2 percent.
In China, Hong Kong’s Hang Seng Index HK:HSI -1.19 percent fell 1.2 percent, and the Shanghai Composite CN:000001 -0.41 percent shed 0.6 percent.
The downbeat session is set to round out a bleak month for the region. Hong Kong’s index was on track for a 13 percent loss for May, Japan was trading down 11 percent, while South Korea and Australia were off by 8 percent each, and the Shanghai Composite was down 1 percent.
European fears had knocked US stocks sharply lower Wednesday, as bond yields in Spain and Italy surged, while fresh polls showing Greek support for anti-austerity parties added to uncertainty surrounding the future of the euro currency bloc. Read more on the US session.
“Hopes that Spain can manage without some sort of bailout package are fading fast,” Capital Economics European economist Mark Miller said.
The concerns hit the euro euro JPY -0.37 percent, with the single currency’s Japanese yen cross-rate falling to JPY 97.42 after trading north of JPY 99 the previous day.
The surging yen maimed Europe-exposed exporters, particularly in the tech sector. Sony Corp. JP:6758 -0.48 percent SNE -3.84 percent dropped 3 percent, Advantest Corp. JP:6857 -5.97 percent ADTTF +19.54 percent plunged 5.1 percent, and Komatsu Ltd JP:6301 -3.58 percent KMTUF -4.76 percent retreated 3.6 percent.
Other export-tied firms gave ground across Asia. Samsung Electronics Co. SSNGY 0.00 percent dropped 2.5 percent and LG Electronics Co. LGEIY 0.00 percent lost 2.8 percent in Seoul, while merchandise supplier Li & Fung Ltd HK:494 -4.36 percent LFUGY -1.54 percent slumped 3.8 percent and Prada SpA HK:1913 -3.73 percent lost 3.3 percent in Hong Kong.
Financials also saw heavy losses in Hong Kong. Index heavyweight HSBC Holdings PLC HK:5 -1.22 percent HBC -3.17 percent dropped 1.5 percent, and Bank of Communications Co. HK:3328 -1.97 percent BCMXY +0.05 percent lost 2 percent.
Likewise, Chinese property firms suffered selling, as Agile Property Holdings Ltd HK:3383 -2.09 percent fell 1.9 percent and China Overseas Land & Investment Ltd HK:688 -3.90 percent tumbled 3.2 percent in Hong Kong, while in Shanghai, Poly Real Estate Group Co. CN:600048 -1.01 percent gave up 1 percent.
UOB KayHin strategists said they expect Hong Kong home prices will soon begin to fall. They remained underweight on the sector but said they saw “more attractive risk-return trade-off in [mainland] China developers.”
Highlighting the level of global concern, London-based jeweller Graff Diamonds Corp. stalled a planned $1 billion initial public offering in Hong Kong, blaming adverse market conditions. Read more on Graff Diamonds IPO cancellation.
Resource firms sold down sharply, after many commodity prices fell overnight amid concerns about global growth.
Tokyo-listed steel maker JFE Holdings Inc. JP:5411 -3.66 percent JFEEF -16.05 percent shed 1.3 percent, while in Sydney, diversified miners BHP Billiton Ltd AU:BHP -1.71 percent BHP -3.84 percent and Rio Tinto Ltd AU:RIO -1.59 percent RIO -4.86 percent fell 2.3 percent, respectively. Australian iron-ore producer Fortescue Metals Group Ltd AU:FMG -2.48 percent FSUGY -3.97 percent plunged 4.6 percent.
Energy firms similarly skidded, with Japan’s Inpex Corp. JP:1605 -3.11 percent IPXHY -0.55 percent down 3.1 percent, and Oil Search Ltd AU:OSH -2.10 percent OISHY -1.86 percent losing 2.8 percent in Sydney, after benchmark US oil futures traded below $88 a barrel electronic trading. Read more on oil.
The few Tokyo gainers included electrical utilities, rising after a Kyodo News report that prime minister Yoshihiko Noda was considering reactivating some of Japan’s nuclear reactors, none of which are currently in operation.
Kansai Electric Power Co. JP:9503 +2.91 percent rallied 3.6 percent, while Tokyo Electric Power Co. JP:9501 +1.30 percent TKECF 0.00 percent rose 2 percent, and Hokkaido Electric Power Co. HKEPF -41.39 percent JP:9509 +3.06 percent added 3.2 percent. Read more on Japan electric utilities.
Also on the upside, shares of Sydney-listed David Jones Ltd AU:DJS -0.44 percent added 0.9 percent after the department store reported a fall in third-quarter sales but said it’s on track to meet annual profit guidance. -By Virginia Harrison