China Jitters Spark Vicious Sell-off Across Asia

(RTTNews) - The Asian markets got a dismal start to the week Monday as concerns over slowing growth in China spurred panic selling across the region, prompting many to term it "Black Monday." The Australian market suffered its biggest one-day falls since September 2011, Japanese shares slid to a five-month low and Seoul shares dropped to a two-year low, as stock prices in mainland China fell sharply once again on growing concerns that the Chinese economy is much weaker than suspected and that the country's central bank would move to weaken its currency over time to boost sagging exports.

China's benchmark Shanghai Composite index plunged almost 9 percent in early trade before recouping some of its loss to end the session down 297.84 points or 8.49 percent at 3,209.91, a five-month low. The hefty plunge came even as Beijing allowed its main state pension fund to invest up to 30 percent of its net assets in domestically-listed shares.

Hong Kong's Hang Seng index fell 1,158.05 points or 5.17 percent to 21,251.57, extending declines for the seventh straight day, as fears surrounding the health of China's economy intensified.

Japanese shares fell the most in two years as a global rout in equities and emerging-market currencies deepened. The benchmark Nikkei average slumped 895.15 points or 4.61 percent to 18,540.68, its lowest level since February 23, while the broader Topix index plummeted 5.9 percent to close at 1,480.87, taking its loss in two weeks to 12 percent. Economy Minister Akira Amari reportedly said that he expects China's economy to settle down as policymakers take steps to bolster growth.

Export-oriented shares bore the brunt of the selling as the safe-haven yen rallied against its rival currencies amid risk-averse mood and growing expectations that the Federal Reserve could delay raising interest rates till the very end of 2015. Canon, Nissan Motor, Panasonic, Honda Motor, Hitachi, Toyota Motor and Sony fell 4-8 percent.

Market heavyweight Fast Retailing declined 2.4 percent, Fanuc dropped 1.7 percent and Softbank shed 3.1 percent. The Bloomberg reported that Netflix Inc. and Softbank Group are considering a content partnership for the video streaming service set to start in Japan on September 2. Banks also closed broadly lower with Mitsubishi UFJ Financial Group, Sumitomo Financial and Mizuho Financial Group ending down over 8 percent each. Energy explorer Inpex lost 4.2 percent and JX Holdings slid 3.9 percent.

The Australian market nosedived, with more than $70 billion wiped out from the market, as investors dumped shares across the board on growing fears of a China-led global economic slowdown. The Bloomberg Commodity Index of 22 raw materials hit a 16-year low as investors fretted over potentially weaker demand from the world's second largest economy.

The benchmark S&P/ASX 200 index tumbled 213.3 points or 4.09 percent to 5,001.3, suffering its largest one-day drop in six years, while the broader All Ordinaries index shed 210.60 points or 4.03 percent to close at 5,014.20.

Fortescue Metals Group plummeted 14.6 percent after its full-year profit slumped 88 percent amid tumbling iron ore prices. BHP Billiton and Rio Tinto both fell about 5 percent. South 32, a mining company spun out of BHP earlier this year, said it is looking to cut costs by $350 million a year by 2018. Gold miner Newcrest Mining lost 3 percent and Evolution Mining retreated 3.7 percent even as gold hovered near its highest level in almost seven weeks in Asian deals after posting its biggest weekly gain since January.

Oil & gas producers Woodside Petroleum and Oil Search fell 5-6 percent and Santos slumped 11.3 percent. U.S. crude oil prices hovered below the key $40 a barrel mark on Monday, pressured by deepening concerns about weak Chinese economic growth and global oversupply. UGL tumbled 4.4 percent after reporting a loss of $236.4 million in the 2015 financial year, compared to a profit of $62.1 million last year. The big four banks lost 4-6 percent.

Lend Lease shares shed 4.1 percent. The property developer cut its final dividend to shareholders after reporting a 25 percent decline in full-year profit. Department store chain Myer Holdings declined 2.8 percent after appointing former Coles executive Mark Cripsey to be its new digital and data chief. BlueScope Steel soared 8.6 percent as it swung to a full-year profit and announced a review of its steelmaking operations in both Australia and New Zealand.

Seoul shares hit a two-year low as heightened tensions along the Korean Peninsula and fears that China's oil and commodity imports could fall further prompted foreign investors to offload stocks for the 14th straight session. The benchmark Kospi average plummeted 46.26 points or 2.47 percent to 1,829.81, its lowest level since July 10, 2013, dragged down by large-cap shares.

Market heavyweight Samsung Electronics fell 2 percent, Hyundai Motor lost 2.4 percent and SK Hynix retreated 3 percent. The South Korean won extended losses against the dollar for a second consecutive session as high-level talks between South and North Korea on how to lower tensions stretched into a third day.

New Zealand shares fell the most in four years as concerns about how China's slowdown would impact the global economy spooked investors. The benchmark NZX-50 index tumbled 143.88 points or 2.50 percent to close at 5,607.31, its lowest level since January. Xero paced the decliners, falling 8.1 percent to $13.80, while Chorus slumped 4.6 percent to a six-and-a-half month low after posting a 39 percent decline in annual profit.

In economic news, interest-rate hikes in New Zealand are likely to be 'off the table' for the near-term despite rising house prices over the past year, the Reserve Bank of New Zealand's Deputy Governor Grant Spencer said today at the Northern Club in Auckland.

Elsewhere, India's Sensex was losing over 5 percent, wiping out more than Rs 3 lakh crore out of the investors' wealth. As the rupee slumped to its lowest level since September 2013, RBI Governor Raghuram Rajan said the central bank was ready to use foreign exchange reserves to reduce currency volatility.

Indonesia's Jakarta Composite index was tumbling 3.5 percent. Taiwan's Weighted index plunged 4.8 percent even as the Financial Supervisory Commission (FSC) banned short-selling of Taiwanese shares at less than the closing prices of the previous business day.

Singapore's Straits Times index was down almost 4 percent, drifting well below the key psychological level of 3,000 points. Malaysia's KLSE Composite index was declining 2.7 percent as the Malaysian ringgit hit a fresh 7-year low against the dollar.

Taiwan's unemployment rate unexpectedly declined to 3.74 percent in July from 3.76 percent in June, official figures showed. Economists had expected the jobless rate to rise to 3.77 percent. Singapore's consumer price inflation fell 0.4 percent year-over-year in July, slightly faster than a 0.3 percent decline in the previous month, a government report showed.

On Wall Street, stocks closed deep in the red for a second day running on Friday as growing fears about the slowdown in China pushed oil prices briefly below $40 a barrel and the latest survey from Markit Economics highlighted a lack of growth momentum and continued weak price pressures across the U.S. manufacturing sector. The Dow plunged 3.1 percent to enter into correction territory, while the tech-heavy Nasdaq tumbled 3.5 percent and the S&P 500 shed 3.2 percent.