Now investors have plenty of reason to sell Asia stocks
HONG KONG: The latest round of inflammatory rhetoric between the US and North Korea has equity investors around the world starting to succumb to their impulse to head for the exit.
US President Donald Trump’s threat of “fire and fury” gave traders a fresh justification to reduce risk yesterday, sending stocks from South Korea to Japan and Hong Kong tumbling.
While investors have previously shrugged off events held up as threats to the bull run in global equities – including earlier bouts of sabre-rattling along the Korean Peninsula – the summer lull is another reason to hesitate before buying the dip this time.
“There’s also a strong sense of those who wanted to sell searching for a reason,” said Takuya Yamada, a senior money manager at Astmax Asset Management Inc in Tokyo. “If something actually happens, it won’t be surprising to see the market fall 5%, 10% in no time at all.”
South Korea’s benchmark gauge slid 1% as of 3:26 pm in Seoul in a second day of losses.
The index has declined in August after posting a record eight straight months of gains through July.
The Kospi 200 Volatility index jumped
30%.
Japan’s Topix index fell 1.1% in Tokyo, the biggest decline since May, on trading volume 22% higher than the 30-day average at the close.
Hong Kong and Taiwan benchmarks also slid on elevated volumes. The S&P 500 Index lost 0.2% in New York, retreating from a record high.
“Japanese equities hadn’t been rising much despite positive earnings results, so investors had started jumping at shadows, doubting whether they should really be holding onto Japanese stocks,” said Soichiro Monji, general manager of the economic research department at Daiwa SB Investments Ltd in Tokyo.
“North Korea is being used as a reason to sell Japanese stocks, just as it was used yesterday in the US.”
Meanwhile the high-profile trial of Samsung Group heir Jay Y Lee is heading into the home stretch and investors are closely watching the outcome to assess its impact on markets.