Asian stocks fell on Monday, dragging the MSCI Asia Pacific Index down the most in almost six months, on concern that measures to reduce fiscal deficits in Europe will hurt economic growth and China will act further to contain property price rises.
The MSCI Asia Pacific Index fell 2.8 per cent to 116.60 at 7.33 pm in Tokyo, the biggest slide since November 27. About six stocks declined for each that gained. The index has lost 9.7 per cent from its high for the year on April 15.
China’s Shanghai Composite Index lost 5.1 per cent.
Japan’s Nikkei 225 Stock Average declined 2.2 per cent, as a government report showed the country’s machinery orders climbed less than economists estimated.
Hong Kong’s Hang Seng Index fell 2.1 per cent, South Korea’s Kospi Index decreased 2.6 per cent and the S&P/ASX 200 Index sank 3.1 per cent in Sydney.
“Europe is certainly the scary story at the moment,” said Jason Teh, who helps manage $2.6 billion at Investors Mutual in Sydney. “Corporate debt risk was the 2008 story, now its sovereign debt risk. Stock market moves from here will depend on government policy actions again.”
In Thailand, where at least 36 people have been killed in fighting between the military and anti-government protesters, the SET Index slumped 2 per cent.
European finance ministers meet in Brussels on Monday, a week after agreeing to a $1-trillion financial lifeline for the euro region. Ministers are under pressure to show they can reduce deficits fast enough to satisfy investors and then police budgets effectively once targets are met. Spain and Portugal have already announced budget cuts.
Financial services, companies accounted for 29 per cent of Monday’s decline in the MSCI Asia Pacific Index.
HSBC Holdings Plc, Europe’s biggest bank that receives 36 per cent of its revenue from Europe, declined 2.3 per cent, the biggest drag on the Hang Seng Index. Standard Chartered Plc, a British lender, slipped 2.6 per cent.
Commonwealth Bank of Australia, the country’s largest lender, sank 3.1 per cent, the fourth biggest drag on the MSCI Asia Pacific.
