A global equity sell-off hit Asian markets on Tuesday after the steepest one-day fall on Wall Street since 2020 as investors worried about a slowdown in the world’s largest economies.
Hong Kong’s Hang Seng index slid 2.8 per cent in afternoon trading after a one-day holiday. Chinese technology groups listed in the territory recorded some of the sharpest declines, with Alibaba falling as much as 7 per cent and the Hang Seng Tech index declining 3.6 per cent.
China’s CSI 300 index of Shanghai- and Shenzhen-listed shares dipped 1.5 per cent before recovering to be up 0.2 per cent by midday.
Tuesday’s falls followed a steep decline for global equities the day before, with the FTSE All-World index down 3 per cent and hitting its lowest level in more than a year.
US government bonds rallied as investors sought safe assets in response to uncertainty over how much the Federal Reserve would raise interest rates. The yield on 10-year Treasuries fell three basis points to 3 per cent. Yields fall when prices rise.
Elsewhere in Asia on Tuesday, South Korea’s tech-heavy Kospi fell 2.1 per cent to its lowest level since November 2020, while Australia’s S&P/ASX 200 and Japan’s benchmark Topix shed 1.2 per cent and 0.2 per cent, respectively.
Bitcoin fell to below $30,000 for the first time since July 2021 as the world’s largest cryptocurrency by market capitalisation was hit by investors moving away from riskier assets.
Oil prices also tumbled with Brent crude, the international oil benchmark, retreating 1.2 per cent to $104.75 a barrel.
However, the Wall Street rout appeared set to ease on Tuesday, with futures for the Nasdaq and the S&P 500 up 0.5 per cent and 0.9 per cent, respectively.
European futures pointed to a mixed open, with the Euro Stoxx 50 0.2 per cent higher and the FTSE 100 0.1 per cent lower.
The Asia losses came after bleak Chinese export data showed growth had slowed sharply last month as weakened demand because of brutal coronavirus lockdowns continued to drag on the world’s second-largest economy.
BlackRock last week reversed its bullish stance on China. The New York-based investment house downgraded its “modest overweight” rating on the country’s stocks and bonds to neutral over the deteriorating economic outlook despite promises of support from Beijing last month.
“We see a growing geopolitical concern over Beijing’s ties to Russia. This means foreign investors could face more pressure to avoid Chinese assets for regulatory or other reasons,” said the BlackRock Investment Institute, an internal research unit led by Jean Boivin.
“Lockdowns are set to curtail economic activity. China’s policymakers have heralded easing to prevent a growth slowdown — but have yet to fully act.”
The world’s largest asset manager had been expanding its presence in China, and its think-tank previously recommended investors boost exposure to the country by as much as three times.