Asian markets slid Monday after terror attacks in Paris unnerved investors and data showed Japan entered a recession for the second time in two years.
The Nikkei 225 dropped 203.22 points, or 1%, to 19,393.69.
In Hong Kong, the Hang Seng fell 385.32 points, or 2.2%, to 22,396.14,
The euro weakened against the U.S. dollar, and investors flocked to assets perceived as safe, including dollar, gold and the Japanese yen.
On Sunday evening, France launched extensive airstrikes against Islamic State’s stronghold in Syria, after the government blamed the extremist group for attacks in Paris, which killed 129 people on Friday.
Despite immediate market jitters, analysts are wary that the attacks will spark any prolonged selling.
Earlier Monday, data showed Japan’s economy entered a recession in the third quarter, shrinking 0.8% on an annualized basis. That marks the second consecutive period of contraction, a common definition of a recession, after a 0.7% fall in the second quarter.
In currencies, the Japanese yen reached its strongest level in roughly a week, recently up 0.1% at ¥122.42 per U.S. dollar compared with late Friday in Asia.
The euro fell to as low as $1.0685 U.S. compared with $1.0745 earlier Monday. It recently traded at $1.0724 U.S.
Meanwhile, the Australian dollar was recently down 0.2% at $0.71 U.S. compared with its trading late Friday.
CHINA
The CSI 300 in Shanghai regained 17.88 points, or 0.5%, to 3,764.13
The Chinese onshore currency traded at its weakest since late September, as officials set the yuan’s fixing weaker for the 10th-straight day. The currency can trade 2% above or below that level.
On Friday, the International Monetary Fund published a paper that said the yuan meets the requirements of a "freely usable" currency.
That signals the institution’s board will likely add the yuan to its basket of elite reserve currencies, which includes the U.S. dollar, euro and yen, at its meeting on Nov. 30.
The onshore yuan was recently at 6.3783 per U.S. dollar, strengthening 0.1% from late in Asia Friday. The offshore yuan is currently trading at 6.4117 to the dollar.
In China, shares fell after the Shanghai and Shenzhen stock exchanges announced plans late Friday that would make it more expensive to buy shares using borrowed money. Under the new rules, investors can borrow an amount equal to the funds in their investment accounts. Currently they can borrow twice that amount.
The new margin requirements will take place on Nov. 23. Goldman Sachs estimates that major brokerages are already enforcing requirements of 60%-80%.
Margin loans, which rose to 1.17 trillion yuan ($180 million U.S.) as of Friday from 906.7 billion yuan on Sept. 30, have helped China’s stock market rally from its August lows.
Data over the weekend showed inflows into Chinese capital markets in October, a sign that Beijing’s efforts to keep money from flowing out of the country after August’s surprise currency devaluation could be bearing fruit. The inflows in October snap four straight months of outflows.
The People’s Bank of China and financial institutions bought a net 12.94 billion yuan ($2.03 billion U.S.) worth of foreign currencies during October, according to a calculation by The Wall Street Journal.
Meanwhile, Beijing’s anticorruption campaign pushed further into the financial sector, with officials announcing that Yao Gang, one of four vice chairman at China’s stock regulator, was suspected of serious violations of discipline, language the antigraft body typically uses for suspected corruption.
Gao heads the regulatory group’s powerful listing department, which recently said it would soon allow Chinese companies to go public again. Authorities had halted IPOs in July as part of measures to try to stop China’s stock market from falling.
In other markets
In Singapore, the Straits Times Index removed 9.95 points, or 0.3%, to 2,915.73
The Kospi index in Korea fell 30.27 points, or 1.5%, to 1,943.02
Taiwan’s Taiex index slipped 34.1 points, or 0.4%, to 8,295.40
In New Zealand, the NZX 50 deleted 27.36 points, or 0.5%, to 5,961.67
The ASX 200 dropped 47.44 points, or 0.9%, to 5,003.82
