WSJ:Asian Shares Lower On China, Euro Fears; HK Slumps 3%
-Asian markets fall on Spanish debt concerns, China growth worries
-Nikkei down 1.9%, Hang Seng Index falls 3%, S&P ASX 200 falls 1.7% lower
-Hang Seng Index rocked by second worst session of the year
(updates share prices, market values throughout)
By Daniel Inman
Hong Kong stocks slumped 3%, leading Asian markets lower, while the euro slid to multi-year lows against both the dollar and the yen as worries over Europe resurfaced and concerns grew over the Chinese economy.
Hong Kong's Hang Seng Index dropped to 19053.47, its second-largest drop this year, as investors focused on comments by a senior People's Bank of China advisor over the weekend who said that he expected Chinese domestic demand to remain weak, reinforcing worries about the region's largest economy.
There were heavy losses in other Chinese companies--such as China Unicom and China Shenhua, which were down 3.4% and 2.5% respectively. Stocks in mainland China were less badly affected as the Shanghai Composite dropped by 1.3% to 2141.40.
When European markets opened down late in the Asian session, the Hang Seng fell even further-- at one point it tested the 3.2% drop it made in mid-May, its worst percentage decline so far in 2012.
The Hong Kong benchmark was dragged down by its largest constituent, HSBC, which sank 5.7%. In addition to the bank's European exposure, analysts say that the U.S. Senate money laundering investigation was also having an effect, and that investors were selling ahead of the company's forthcoming earnings report. HSBC shares in London, were down 2.4% late in the Asian session.
HSBC led a bank sell off across the region as the European debt crisis came back on the scene. In Japan, Nomura Holdings fell by 3.1% and Sumitomo Mitsui Financial Group lost 2.9%; while in South Korea, Woori Finance Holdings sank 3.3%.
Europe once again was also pressed to the forefront of investor concerns, as yields on Spanish 10-year sovereign bonds reached 7.24% on Friday, a level that could require Spain to ask for more financial help from its euro-zone neighbors. The Spanish government also cut the country's growth forecasts for 2013 and said that it will remain in recession next year.
"Europe is definitely a drag on risk assets again this week as investors are worried that Spain's debt burden could be bigger than expected and that a full bailout may be required," said CityIndex chief market strategist Peter Esho in Australia.
There were also concerns about Greece's finances, as the European Central Bank said that it would reject Greek government bonds as collateral.
The euro dropped against the dollar to its lowest level for more than two years on Friday, and continued to fall in Asia, to $1.2087, compared to $1.2158 late on Friday. Falling to (Yen)94.33 on Monday, the single currency hit its lowest level against the yen since November 2000.
"It's not the kind of situation where fears are just going to fade away, since the required amount of aid that Spain will need is likely to mount given the increasing needs of local government," said Masayuki Doshida, a senior market analyst at Rakuten Securities in Japan.
Asian risk currencies were also affected by the European jitters--most notably, the Australian dollar, which fell to $1.0290 on Monday from $1.0404 late Friday. The dollar also gained against the South Korean won, rising to 1,145 compared to 1,141 at the end of the week.
South Korea's Kospi ended the session down 1.8% at 1789.44 on Monday, as investors sold banks and energy stocks at the start of a busy week of earnings reports, with releases from major companies like LG Electronics and Hyundai Motor on the slate.
Japan's Nikkei Composite ended the day 1.9% lower to 8508.32 at a six-week low, as local exporters with a large exposure to Europe were hit by the weakened euro: Sony fell by 4.1% and Sharp fell by 5.2%.
Australia's S&P ASX 200 closed 1.7% lower at 4128.90, giving up a large chunk of the 2.8% gain that it made last week.
In company news, Suzuki Motor dropped 3.9% in Tokyo, as the carmaker was hampered by uncertainty over the resumption of the operations of its plant in northern India. The company's local subsidiary, Maruti Suzuki India, declared a lockout over the weekend, which it said would continue until local authorities complete an investigation into a riot by some of its workers that resulted in the death of a senior official.
