Asia-Pacific Indexes: Post Weekly Losses as Global Bond Yield Surge Wreaks Havoc

James Hyerczyk
·3 min read

The major Asia-Pacific stock indexes finished lower last week as investors followed Wall Street lower with a selling spree driven by a U.S. Treasury bond yield surge.

Hong Kong stocks posted their worst week in a year, while worries about central bank tightening and new corporate regulations pressured Chinese shares. Foreigners were net sellers of Japanese stocks on the yields rise, but the Bank of Japan took advantage of the stock market rout with an ETF buy for the first time this month.

South Korean shares posted their worst weekly performance in nearly 2-1/2 years as the bond yields surge crushed demand for technology stocks. Australian shares also tumbled on firmer bond yields and a plunge in technology and miners shares.

Cash Market Performance

In the cash market last week, Japan’s Nikkei 225 Index settled at 28966.01, down 1051.91 or -3.50%. South Korea’s KOSPI Index finished at 3012.95, down 94.67 or -3.05% and Hong Kong’s Hang Seng Index closed at 28980.21, down 1664.52 or -5.43%.

In China, the Shanghai Index settled at 3509.08, down 187.19 or -5.06% and in Australia, the S&P/ASX 200 Index finished at 6673.30, down 120.50 or -1.77%.

Hong Kong Stocks Post Worst Week in One Year as Bond Yields Surge

Hong Kong stocks ended sharply lower last week, in line with broader markets, posting their worst week in one year, as a rout in global bonds sent yields flying and dampened appetite for risky assets.

For the week, HSI tumbled 5.4%, while HSCE slumped 7.1%, both logging their steepest drops since the week to March 13, 2020.

Earlier in the week, Hong Kong shares posted their worst daily performance in more than nine months on Wednesday after the city announced a hike in stamp duty on stock trading, prompting huge outflows of mainland cash.

China Shares Slump Most in Seven Months as Tightening Fears Mount

Chinese shares closed lower last week, with the benchmark stock index witnessing its biggest daily drop in seven months, as investors worried about high valuations amid growing concerns of tightening in policies.

China’s benchmark index lost ground over policy-tightening worries, after advancing to a more than 13-year high in February on optimism around the country’s economic recovery. That is despite indications that while the central bank will scale back support for the economy in 2021 and cool credit growth, fears of debt defaults and a derailed recovery will prevent it from tightening any time soon.

Nikkei Drops to Near 3-week Low as Spike in Bond Yields Spooks Investors

Japanese shares slumped last week, while logging their biggest daily decline in nearly a year, after a spike in global bond yields spooked investors already uneasy about the market’s stretched valuation.

Helping to possibly curb the selling pressure, the Bank of Japan bought exchange-traded funds (ETFs) on Friday for the first time this month as Tokyo stock prices slumped, data showed, in a sign the central bank is becoming more flexible with its asset purchases.

The BOJ bought 5 million yen ($47,068) worth of ETFs on Friday, central bank data showed. Some analysts saw the BOJ’s moves in February as a prelude to what may come out of a March review of its policy tools to make its asset-buying program more nimble.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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