Asian stocks tumble on global fears

Regional bourses have taken a battering as fresh Brexit worries hit confidence.

Japanese stocks fell sharply, leading shares across Asia sharply lower as a fresh bout of anxiety over Brexit risks rattled investors.

Japan’s Nikkei Stock Average ended down 1.9 per cent Wednesday, the loss having narrowed as the yen weakened slightly in the afternoon. Elsewhere, Australia’s S&P/ASX 200 fell 0.6 per cent, South Korea’s Kospi dropped 1.9 per cent and Hong Kong’s Hang Seng Index was last down 1.1 per cent. China’s Shanghai Composite Index defied the regional decline by ending up 0.4 per cent.

The British pound’s overnight slide to a 31-year low, comments from the Bank of England and investors’ inability to pull money out of certain UK real-estate funds renewed worries about prolonged uncertainty in Europe.

BoE Governor Mark Carney said Tuesday there is a limit to what the central bank can do to ease economic pain, and that in part sent investors to the yen and gold, the perceived havens in Asia.

A strong yen hurts the competitiveness of Japanese exports and chips away at the value of exporters’ repatriated income, leading investors to dump shares on expectations of lower earnings.

“The stronger yen is obviously hurting Japan, so Japan [stocks are] crumbling,” said Andrew Clarke, director of trading at Hong Kong-based brokerage Mirabaud Asia. Banks and exporters were hit hard, with Shinsei Bank sliding 3.6 per cent, Mitsubishi UFJ Financial Group 3.6 per cent and Nissan Motor 2 per cent.

“Most institutional investors have already lowered their positions in Japan, ever since the Japanese yen fell from 115 to 105,” said Steven Leung, head of institutional sales at UOB Kay Hian. “At this level at 100, they don’t have too many positions left to trim.” The yen was recently trading at 101.03 to the US dollar.

The yen’s strength also raises concerns about whether the Japanese government will intervene to counter the rise.

In another sign investors are flocking to safety, gold surged to a two-year high in Asia trading, making gold stocks among the region’s few winners. China’s Zhongjin Gold Corp. jumped 9.1 per cent, and Australia’s Newcrest Mining climbed 3.2 per cent.

China was one of Asia’s best performing markets on Wednesday, with the equities market reversing the morning’s losses to end higher for the fourth consecutive session, led by gains in stocks of consumer staples.

Developer China Vanke’s Shenzhen-traded shares rose less than 0.1 per cent, but that may count as a strong showing following two sessions in which they fell the 10 per cent daily limit. Major Vanke shareholder Baoneng Group, which has been leading a hostile-takeover attempt, said in an overnight exchange filing that it had increased its holdings.

In other markets, investors continued their hunt for yield in longer-dated bonds. The yield on Japan’s latest 20-year note touched negative territory for the first time, at minus 0.005 per cent in Tokyo trading.

The yield on Japan’s 10-year government bond hovered at minus 0.269 per cent, while the yield on Australia’s 10-year bond fell to 1.861 per cent, both historical lows. Bond yields fall as their prices rise.

“People are really looking everywhere and anywhere for potential yield,” said Mirabaud’s Mr Clarke.

- Dow Jones newswires