Asian stocks fall for 3rd day on fears, China hits 3-month lows

HONG KONG: Asian stocks declined for a third consecutive day on Friday as fresh falls in commodities raised concerns about the health of the global economy, though the euro bucked the broad weakness on receding concerns about France’s presidential election.

Chinese stocks led regional losers, falling to a three-month low as concerns about tighter financial regulations weighed on banking shares while oil plays such as Petrochina and Sinopec tumbled on oil’s retreat below the $45 per barrel mark.

In the latest attempts by Beijing to reduce leverage in the nation’s banking system, regulators are turning their attention to capital rotation, breaches of arbitrage rules and illegal transactions, the official Shanghai Securities News reported on Friday, citing bank sources.

“Obviously regulations are tightening and a large number of regulatory measures will come in the second half of the year, thus hurting sentiment,” said Zhu Qibing, an analyst with BOCI Securities.

While regulatory enforcement sprees are not new to China, investors fear there may be no let up in a new wave of tightening soon after President Xi Jinping last week made a rare speech on financial stability.

Xi called for increased efforts to ward off systemic risks to help maintain financial security, the official Xinhua news agency said.

MSCI’s broadest index of Asia-Pacific shares outside Japan extended its decline to be down 0.8 per cent on Friday and was trading at its lowest level since April 25.

European stock markets are set to follow in Asia’s wake with key indices likely to open between 0.2 to 0.4 per cent lower.

Other commodity-related plays such as the Australian stock market also fell with a benchmark index declining 0.8 per cent.

Big miners such as Rio Tinto Ltd, BHP Billiton Ltd and Fortescue Metals Group Ltd fell between 2.7 to 3 per cent.

“The falls in commodities prices definitely tell us there is some kind of a moderation under way in the global economy and I would advise taking some money off the table at these levels,” said Cliff Tan, East Asia head of global markets research at Bank of Tokyo Mitsubishi UFJ in Hong Kong.

On Friday, Chinese iron ore futures fell nearly 7 per cent in opening trades after tumbling 8 per cent on Thursday on concerns that global commodity demand may fall sharply in the face of record supplies.