Asian shares plunge as Wall St declines fuel more sell-offs

A man walks by an electronic stock board of a securities firm in Tokyo

Tokyo - Many China-listed companies hit their 10 per cent downside limits, and only a handful saw their share prices rise.

By AP

Published: Mon 24 Aug 2015, 10:12 AM

Last updated: Mon 24 Aug 2015, 12:25 PM

Stocks tumbled across Asia on Monday with China's main index losing 8.8 per cent on Monday as investors shaken by the sell-off last week on Wall Street unloaded shares in practically every sector.
The Shanghai composite index's slide to 3,200.85 by early afternoon came as analysts and investors watched for signs that Chinese regulators or the central bank might intervene.
Regulators said they would allow the State Pension Fund to invest up to 30 per cent of its total net assets in stocks and other equities, but that move was an approval of a policy announced earlier and had no discernible impact on investor sentiment.
Many China-listed companies hit their 10 per cent downside limits, and only a handful saw their share prices rise.
The China benchmark has lost all of the gains of its meteoric rise earlier in the year, though it is still up 43 per cent from a year ago.
Other Asian markets remained jittery, though the yo-yoing from fresh lows suggested some investors might be venturing back in to snap up bargains.

Hong Kong's Hang Seng index fell 4.6 per cent to 21,369.70 and Japan's Nikkei 225 stock index dropped 4.6 per cent to 18,544.03. Australia's S&P ASX/200 slid 3.9 per cent to 5,009.10, while South Korea's Kospi lost 3.0 per cent to 1,819.23.
Fresh evidence of the slowdown in China's economy sparked a wave of selling on Friday in Europe and the US that culminated with the S&P 500 losing nearly 6 percent for the week in its worst weekly slump since 2011.
That bloodletting, which has spilled over into this week, followed the release of a key gauge of manufacturing, a purchasing managers' index, or PMI, showing industries are continuing to contract. Weaker demand is spilling over into other markets, especially resource-dependent emerging economies that export to China.
"Investors are taking a safety first approach to the stock market given the potential for instability related to capital flight from emerging economies," Ric Spooner, a market strategist for CMC Markets, said in a commentary.
Some analysts say they see huge opportunities for bargains in the latest plunge in prices, but overall sentiment remains gloomy.
"While some blame the correction on the ongoing Chinese slowdown given the poor Chinese flash PMI read, we think it also reflects contagion and position adjustment given the significant declines seen in emerging markets," Mizuho Bank said in a daily market commentary.
The dollar was trading at 121.08 yen on Monday, down from 122.05 yen on Friday. The euro rose to $1.1450 from $1.388.
A slide in the value of the US dollar against the Japanese yen is hurting shares in Tokyo, where exporters have benefited in the past two years by a weaker yen.
Sony Corp.'s shares fell 7.4 per cent by midday Monday, while Toyota Motor Corp.'s shares dropped 5.8 percent.
Prices for oil and other commodities also have been falling on expectations of weaker demand from China and other major importing economies.
Benchmark US crude dropped $1.13 to $39.32 a barrel in electronic trading on the New York Mercantile Exchange. It fell 87 cents to $40.45 a barrel on Friday. Brent crude, a benchmark for international oils used by many U.S. refineries, fell $1.07 to $44.39 a barrel.