INSUBCONTINENT EXCLUSIVE:
TOKYO: Asian shares slumped on Tuesday as fears about a drawn out Sino-U.S
trade war, protests in Hong Kong and a crash in Argentina's peso currency drove investors to safe harbours like bonds, gold, and the
Japanese yen.
MSCI's broadest index of Asia-Pacific shares outside Japan skidded 1 per cent
Chinese stocks fell 0.8 per cent, while Hong Kong's main market index tumbled more than 1 per cent to a seven-month low.
"The protests in
Hong Kong are negative for stocks, which were already in an adjustment phase because there is talk that the trade war will trigger a
recession," said Kiyoshi Ishigane, chief fund manager at Mitsubishi UFJ Kokusai Asset Management Co.
Hong Kong's airport, the world's
busiest cargo airport, reopened on Tuesday, which could ease some concern about the immediate economic impact of protests over the past two
The protests began in opposition to a bill allowing extraditions to mainland China but have quickly morphed into the biggest challenge to
China's authority over the city since it took Hong Kong back from Britain in 1997.
Japan's Nikkei was also hit hard, down a sharp 1.5 per
cent and on course for its biggest daily decline in a week.
U.S
stock futures were 0.13 per cent higher in Asia, but that did little to ease the mood.
Stocks in Singapore shed 1.1 per cent to reach their
lowest since June 6 after the government slashed its full-year economic growth forecasts
The city state is often seen as a bellwether for global growth because of its importance as a key trade hub.
The selling in regional markets
came as Wall Street stocks took a beating on Monday, with the S-P 500 losing 1.23 per cent.
Sentiment was already weak due to increasing
signs that the United States and China will not quickly resolve their year-long trade war
Markets were hit with further turbulence after protesters managed to close down Hong Kong's airport on Monday.
Traders were also on edge
after market-friendly Argentine President Mauricio Macri suffered a mauling in presidential primaries, increasing the risk of a return to
interventionist economic policies.
Benchmark 10-year Treasury yields were near the lowest in almost three years, gold was pinned close to
six-year highs, and the yen was within a whisker of a seven-month peak versus the dollar in a sign of the heightened anxiety in financial
markets already battered by global growth woes.
"Long-term rates will continue to fall, and stocks will adjust lower, but this is temporary
Major central banks are cutting rates, which will eventually provide economic support," Mitsubishi UFJ's Ishigane said
Analysts said that trading could be subdued as many investors are off for summer holidays
Yet, there was no shortage of gloomy news for investors looking to catch their breath from several months of market ructions.
The Argentine
peso collapsed overnight, falling to 55.85 to the dollar, after voters snubbed Macri by giving the opposition a surprisingly
bigger-than-expected victory in Sunday's primary election.
The Merval stock index crashed 30 per cent and declines of between 18-20 cents in
Argentina's benchmark 10-year bonds left them trading at around 60 cents on the dollar or even lower.
Refinitiv data showed Argentine
stocks, bonds and the peso had not recorded this kind of simultaneous fall since the South American country's 2001 economic crisis and debt
default.
The grim backdrop was enough to push investors into safe-havens, and U.S
Treasury yields dropped across the board on Monday as trade worries and political tensions supported safe-haven assets
In Asia on Tuesday benchmark 10-year Treasuries yields fell to 1.6471 per cent
On August 7 yields had skidded to 1.5950 per cent, the lowest since October 3, 2016.
Spot gold rose 0.33 per cent to $1.516.42 per ounce,
near the highest in six years.
The yen last fetched 105.37 per dollar, and was within striking distance of 105.03, its strongest since the
January 3 flash crash.
The Swiss franc, which along with the yen is considered a safe haven in times of trouble, traded at 0.9697 per
dollar, near its highest in a year.
Oil prices edged slightly lower in Asian trading as expectations that major producers will continue to
reduce supplies ran into worries about sluggish economic growth.
U.S
West Texas Intermediate futures fell 0.33 per cent to $54.75 a barrel.
