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Asia Stocks Suffer Amid Ukraine Invasion, Tech Crackdowns

Investors turned to oil and safe-haven assets after Russian leader Vladimir Putin ‘recognised’ two rebel-held areas in eastern Ukraine and sent in troops

Traders were distracted by upcoming Bank of Japan and US Fed summits as soaring prices continue to hamper growth across the region.
Shares of Japanese heavy industries were some of the strong performers on Tuesday. File photo by Reuters.


Asia’s equity markets plunged on Tuesday after Russia’s Vladimir Putin ordered troops into two separatist regions in eastern Ukraine, with Hong Kong hardest hit with threats of another tech sector crackdown by Beijing adding to traders’ woes.

Investors were sent running to oil and safe-haven assets after Putin recognised the independence of two rebel-held areas of Donetsk and Lugansk and sent in “peacekeeping” forces.

The move came hours after the Kremlin appeared to pour cold water on a potential summit with US President Joe Biden and led to condemnation from world leaders and warnings Moscow would be hit with a series of sanctions.


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Biden, France’s Emmanuel Macron and German Chancellor Olaf Scholz warned that Moscow’s gambit “would not go unanswered.”

The White House said Biden would issue an executive order to “prohibit new investment, trade and financing by US persons to, from, or in” the two rebel regions.

A French presidential official said the European Union was preparing a list of Russian entities and individuals to sanction in a “proportionate” response to the recognition. The EU said it would adopt sanctions later on Tuesday.

The prospect of war and strict sanctions sparked concerns about the impact on supplies of a range of commodities from the region, including oil, wheat and nickel.

Crude – already up more than 25% this year on surging demand – piled higher still on Tuesday, with Brent closing in on the $100 mark for the first time since 2014.

Hopes of an Iran nuclear deal, which could see Tehran resume global oil exports, were unable to temper the gains.


Oil Jump Sparks Inflation Fears

The jump in oil is compounding worries about inflation around the world, with the Federal Reserve coming under intense pressure to tighten monetary policy to prevent prices running out of control.

That has in turn battered equity markets in recent months, and the latest developments out of Europe led to another day of hefty selling Tuesday.

Russia’s MOEX index plunged 8% at the open, having lost 10% on Monday, while London, Paris and Frankfurt tumbled in early exchanges.

In Asia, Tokyo, Shanghai, Sydney, Seoul, Singapore, Mumbai and Taipei dived at least 1%, while there were also losses in Bangkok, Jakarta and Wellington.

Hong Kong tanked owing to a selloff in tech firms as traders again fret over the possibility China will embark on another crackdown on the sector.

Those fears were fuelled by a report that regulators had ordered a probe into state firms’ links with Alibaba fintech arm Ant Group. The city’s struggle to contain a Covid outbreak has also hit sentiment in Hong Kong as leaders impose strict containment measures.


Hang Seng Hit Hardest

The Hang Seng Index dived more than 3% at one point but made a marginal recovery to end the day down 2.69%, or 650.07 points, at 23,520.00.

The Shanghai Composite Index shed 0.96%, or 33.47 points to 3,457.15, while the Shenzhen Composite Index on China’s second exchange lost 1.23%, or 28.50 points, to 2,297.30.

Tokyo’s benchmark Nikkei 225 index fell 1.71%, or 461.26 points, to 26,449.61, while the broader Topix index slumped 1.55%, or 29.60 points, to 1,881.08.

The uncertainty on trading floors was also pushing safe havens higher, with gold climbing past $1,900 and heading for a one-year high, while the yen was also stronger against the dollar.

The greenback was sharply higher against other currencies, however, including a 4% gain on the rouble. And commentators warn of further pain if Putin presses ahead with an invasion of Ukraine.


Key figures around 0820 GMT

Tokyo > Nikkei 225: DOWN 1.7% at 26,449.61 (close)

Hong Kong > Hang Seng Index: DOWN 2.7% at 23,520.00 (close)

Shanghai > Composite: DOWN 1.0% at 3,457.15 (close)

London > FTSE 100: DOWN 1.4% at 7,379.87

New York > Dow: Closed Monday for a public holiday


  • AFP with additional editing from Sean O’Meara


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Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.


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