Asia Shares Drop as Brexit Uncertainty Persists
July 06 2016 - 1:00AM
Dow Jones News
Japanese stocks tumbled Wednesday, leading stock markets across
the region sharply lower as a fresh bout of anxiety over Brexit
risks rattled investors.
Japan's Nikkei Stock Average sank 2.7% as the yen continued its
strengthening trend. Elsewhere, Australia's S&P/ASX 200 fell
1.3%, South Korea's Kospi dropped 2.1% and Hong Kong's Hang Seng
Index lost 2.0%. China's Shanghai Composite Index fell 0.2%.
The pound's slump to a 31-year low overnight and comments from
the Bank of England renewed worries about prolonged uncertainty in
Europe. BOE Governor Mark Carney said Tuesday the central bank
wouldn't be able to completely mitigate economic pain, and that
sent investors to the yen, the perceived haven in Asia.
Investors buy Japan's currency during times of market turmoil,
but a strong currency chips away at the value of the repatriated
income of Japanese exporters, so investors dump shares on
expectations of lower earnings. The yen was recently trading at
100.75 to the U.S. dollar.
"The stronger yen is obviously hurting Japan, so Japan [stocks
are] crumbling," said Andrew Clarke, director of trading at Hong
Kong-based brokerage firm Mirabaud Asia.
Shares of Japanese banks and exporters were hit hard. Shinsei
Bank was down 5%, Mitsubishi UFJ Financial Group sank 4.2%, and
Nissan Motor lost 3.8%.
An overnight decline in Brent crude oil prices also pounded
energy shares across the region. In Australia, Woodside Petroleum
sank 1.9%, and Oil Search fell 2%. In Hong Kong, shares of Chinese
state-owned firm Sinopec fell 3.1%, and Cnooc slumped 2.7%.
In China, stocks reversed Tuesday's gains as risk appetite
dwindled. Developer China Vanke's Shenzhen-traded shares stemmed
losses after falling by the 10% daily limit for two straight
sessions. Its shares were last down 1.5%, after major shareholder
Baoneng Group, which has been leading a hostile takeover attempt,
said in an overnight exchange filing that it had increased its
holdings in Vanke.
Chinese gold shares were among the day's few winners. Zhongjin
Gold Corp. jumped 9.1%.
In other markets, investors continued their hunt for yield in
longer-dated bonds. The yield on Japan's latest 20-year note hit an
all-time low of minus-0.005% in Tokyo trading, touching negative
territory for the first time.
The yield on Japan's 10-year government bond hovered at
minus-0.269%, while the yield on Australia's 10-year bond fell to
1.861%, both historical lows. Bond yields fall as their prices
rise.
"People are really looking everywhere and anywhere for potential
yield," Mr. Clarke said.
Meanwhile, an anomaly emerged in the iron-ore market. Prices
rose even though the supply of the metal increased. The spot value
of iron ore is up more than 10% since the start of June, while the
inventory of imported ore at China's ports is at an 18-month
high.
Robb Stewart, Rhiannon Hoyle, Hiroyuki Kachi, Kosaku Narioka
and Yifan Xie contributed to this article
Write to Dominique Fong at Dominique.Fong@wsj.com
(END) Dow Jones Newswires
July 06, 2016 00:45 ET (04:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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