Asian stock markets closed their worst monthly performance in more than three years in August, as shares struggled to recover from a global selloff sparked by worries about China.
In Japan, the Nikkei 225 index ditched 245.84 points, or 1.3%, to close the month of August at 18,890.48. The index was down 8.2% this month, its worst month since January 2014.
The Japanese yen, which serves as a haven asset during selloffs, strengthened 0.4% to Yen121.19 against the U.S. dollar
In Hong Kong, the Hang Seng Index picked up 58.19 points, or 0.3%, to 21,670.58, its worst monthly performance since September 2011. It is down about a fourth from late April when it hit its highest level since 2007.
Last week, the Hang Seng, along with benchmarks in Taiwan and Indonesia fell into bear territory, which is defined as a loss of 20% or more from a recent high.
Australia’s S&P ASX 200 is down 8.6% this month, its worst monthly performance since October 2008.
CHINA
In China, the CSI 300 gained 24.25 points, or 0.7%, to 3,366.54,
A slowdown in China’s economy, magnified by a surprise devaluation of the Chinese yuan earlier this month, accelerated a rout in Shanghai that spread across the globe, pushing down everything from stocks in the U.S. and Europe, to commodities and emerging market-currencies.
While stability has returned in recent days in Asia, the selloff has left currencies in the region near multiyear lows and stocks at their lowest levels in months.
Earlier this year in Asia, stocks fell as the Shanghai market fell from a mid-June high. But the region’s selloff accelerated once Shanghai started swinging wildly late this month — the index’s 8.5% drop on Aug. 24, dubbed "Black Monday" by state media, was its worst single day loss in more than eight years. A day later, Beijing cut interest rates for the fifth time since November.
As Beijing readies for celebrations commemorating the 70th anniversary of the end of World War II, the Shanghai Composite is down 38% from its June peak. Markets on the mainland will be closed Thursday and Friday, when Beijing puts on parade for the world to show off its growing military prowess, in spit of the wobbly economy.
The yuan has fallen about 2.7% in August against the U.S. dollar, but it is expected to fall further as policy makers allow the currency to trade more in line with market guidance. Further weakness would pressure the currencies of neighboring countries that compete with China in the global export market, in addition to commodity-exporting countries that may face weaker Chinese demand.
Despite the China rout, global investors bought 24 billion yuan worth of Shanghai stocks in August through a trading link with Hong Kong, the largest monthly inflows for the program since February and a reversal from 27.3 billion yuan of outflows in July.
Over the weekend, Beijing said it would cap local government debt at 16 trillion yuan ($2.5 trillion U.S.). The Standing Committee of China’s National People’s Congress imposed a 600-billion-yuan limit on the direct debt local governments are allowed to run up this year, the official Xinhua News Agency said late Saturday.
Xinhua has also reported that Chinese authorities are holding a financial journalist, a regulator and four senior staff from a brokerage for suspected violation of market rules. The crackdown follows efforts earlier this summer by Chinese authorities to curb what they called "malicious short selling" — previous such crackdowns were popular with investors.
In other markets
In Korea, the Kospi index inched up 3.82 points, or 0.2%, to 1,941.49
In Singapore, the Straits Times Index dropped 34.50 points, or 1.2%, to 2,921.44
In Taiwan, the Taiex index added 155.74 points, or 1.9%, to 8,174.92
The NZX 50 moved lower 14.24 points, or 0.3%, to 5,656.25
The ASX 200 Index slid 56.58 points, or 1.1%, to 5,206.98
