Japanese stocks fell to a seven-month low with the Nikkei Stock Average giving up its gains for the year, after weak Chinese trade data stoked concerns about a further slowdown in the world’s second-largest economy.
In Japan, the Nikkei 225 index tumbled 433.39 points, or 2.4%, to 17,427.08. It is now off 0.1% year-to-date.
In Hong Kong, the Hang Seng Index rocketed ahead 675.52 points, or 3.3% to 21,259.04
For Japan, the losses Tuesday marked a deepening of a slump that began in late June, when China’s stock market tumbled. Global stocks followed suit amid fears over the health of the Chinese economy.
The Nikkei surged after Prime Minister Shinzo Abe took office in December 2012 and embarked on an aggressive quantitative-easing program. The benchmark closed above 20,000 in late April for the first time since 2000, and was up as much as 16% year-to-date in June.
But now Japanese stocks are falling in sync with markets across the region, and the government has much less capacity to step up stimulus. The Nikkei’s latest declines come as the Japanese yen has strengthened against the U.S. dollar.
The strengthening of the yen in recent sessions in particular, he said, has pushed down Japanese shares because Japanese exporters rely on a weaker yen to help improve their profit margins.
The yen is up roughly 1.3% this month and up 4% in the past three months as the U.S. dollar stalls. “The outlook for the yen has a lot of further strengthening,” added Nicholson.
The Nikkei, down nearly 8% this month, is now the worst performing major stock index in Asia. Even shares in Shanghai are only off 3% this month.
Foreigners sold ¥1.4 trillion ($12 billion U.S.) of Japanese stocks in August, the most since August 2011, the country’s finance ministry data showed Tuesday. The purchase of ¥52.1 trillion in stocks and the selling of ¥53.6 trillion in stocks, by foreigners, were also both at the highest level since the data became available in 2005.
On Tuesday, Japanese stocks linked to demand from foreign, particularly Chinese, tourists lost ground. Chemical and cosmetics firm Kao Corp. fell 4.2% to ¥4,965. Retail-store operator Seven & I Holdings Co. dropped 4.1% to ¥4,763.0.
In currencies, South Korea’s won fell to its weakest level since July 2010.
The Australian dollar and Singaporean dollar each stayed near six-year lows against the U.S. dollar.
CHINA
The CSI 300 in Shanghai returned from holiday to add 83.54 points, or 2.6%, to 3,334.02
The latest reading on China’s economy Tuesday showed that exports fell for the second-straight month.
China’s exports fell 5.5% in August from a year earlier in dollar terms, after a drop of 8.3% in July, data from the General
Administration of Customs showed Tuesday. Economists polled by The Wall Street Journal had forecast a 5.2% decline. Meanwhile, imports in August fell 13.8% from a year earlier, below the poll’s forecast of a 7.9% decrease.
China’s stock market has now fallen roughly 40% from its June peak. The declines came as Chinese brokerages forced investors to unwind their leveraged bets, amplifying the market’s losses and spurring further selling.
Official margin debt provided by Chinese brokerages has now fallen below one trillion yuan for the first time since December, according to data provider Wind Information Co. But investors continue to rush for the exits, spooked by China’s weakening economy.
Yesterday, Chinese authorities revised down their reading of the country’s growth rate for last year, pushing the Shanghai market off 2.5%.
China’s stock exchanges Tuesday made official a plan to install a circuit-breaker mechanism to prevent panic selloffs in case of drastic swings in the market.
The Shanghai and Shenzhen stock exchanges will tie the circuit-breaker system to the CSI 300 Index, which tracks stocks on both bourses. A temporary suspension of trading will be triggered when the index swings upward and downward for 5% and 7%.
In other markets
In Korea, the Kospi index dropped 4.54 points, or 0.2%, to 1,878.68
In Singapore, the Straits Times Index regained 32.91 points, or 1.2%, to 2,885.32
In Taiwan, the Taiex index moved up 14.94 points, or 0.2%, to 8,001.50
The NZX 50 picked up 37.58 points, or 0.7%, to 5,610.37
The ASX 200 Index gained 84.83 points, or 1.7%, to 5,115.25
