HONG KONG (Nikkei Markets) — Asian equity markets broadly declined on Monday on lingering tensions over North Korea and concern that weekend election results in Germany may add to political uncertainty in the euro zone.
Hong Kong shares led the losses in the region. The Hang Seng Index slid 1% to 27,590.07 by midday, poised for its steepest single-day loss since Aug. 18. Forty-six of its 50 constituents edged lower. Elsewhere, the Shanghai Composite Index fell 0.4%, South Korea’s Kospi fell 0.4%, Taiwan’s main equity gauge gave up 0.9%, and benchmark stock indexes in India and the Philippines each retreated 0.8%. The Nikkei Asia300 Index of regional equities outside Japan declined 0.6%.
Sentiment toward assets considered to be risky remained weak after North Korean Foreign Minister Ri Yong Ho warned over the weekend that targeting the U.S. mainland with the nation’s missiles was inevitable, continuing a war of words between leaders of the two nations. Investors were also cautious as Sunday’s elections in Germany were poised to result in a bigger-than-expected success for a far-right opposition party. While estimates based on an official vote count showed Chancellor Angela Merkel was heading for a fourth-consecutive term, her win was marred by a sharp fall in support for an alliance led by her party.
“We expect the outcome to have limited impact on financial markets but see it slowing momentum behind efforts to strengthen the Eurozone,” analysts at BlackRock Investment Institute wrote in a report. “The election result also showed euroskeptic sentiments still run high in the bloc.”
KB Financial Group slid 3.3% in Seoul, Hon Hai Precision Industry gave up 2.3% in Taipei and State Bank of India lost 2% in Mumbai, as regional investors shunned equities. In Hong Kong, heavyweight Tencent Holdings lost 1% and stock-market operator Hong Kong Exchanges & Clearing dropped 1.6%.
Andrew Wong, the Hong Kong-based chairman of financial services company Anli Holdings, said that while escalating tensions between North Korea and the U.S. were a negative factor, local equities were also pressured by a “quarterly adjustment” being made by investors before the end of the July-to-September quarter. Mainland Chinese markets will be closed for the eight-day National Day holiday starting Oct. 1.
Chinese property developers tumbled on Monday, sending a gauge of large real-estate companies traded in Hong Kong down 2.4%, after mainland state media reported eight cities, including Xi’an and Chongqing, had imposed tighter restrictions on the housing market over the weekend. The curbs include a ban on home sales within two years of purchases, and follow a surge in home prices over the past year.
China Resources Land slumped 6.1%, China Overseas Land & Investment gave up 6% and China Vanke tumbled 6.7%.
Ping An Insurance Group fell 1.1% after saying it has signed an agreement to invest about 1.6 billion yuan ($242.5 million) for a 10% stake in Japan’s Tsumura, becoming the largest shareholder in the herbal-drug maker.
— Carrie Chen and Amy Lam