Hong Kong stocks plunged on Monday dragged down by concerns about troubled property giant China Evergrande, which saw trade in its shares suspended.
The crisis at Evergrande, which is drowning in a sea of debt worth more than $300 billion, has unsettled markets in recent weeks with fears that its failure could spill over into the wider Chinese economy and possibly further.
The firm said in a statement that the trading halt was called “pending the release by the company of an announcement containing inside information about a major transaction.”
The news came as reports claimed Hopson Development Holdings planned to buy a 51% stake in its property services arm. However, traders remain concerned Evergrande will miss payments on its bond obligations, putting it in default.
“There still remains very little visibility from the Chinese Government over Evergrande’s fate, although a slow and steady dismantling of the company appears to be the favoured course right now,” said OANDA’s Jeffrey Halley.
Hong Kong stocks, already under pressure owing to concerns about China’s crackdown on a range of industries including tech firms and casinos, sank with the Hang Seng Index shedding 2.19%, or 539.27 points, to 24,036.37.
Tokyo fell again – a sixth straight loss – while Taipei was also in negative territory. Still, there were gains in Sydney, Singapore, Wellington, Bangkok, Mumbai, Manila and Jakarta. Shanghai and Seoul were closed for public holidays.
The Nikkei 225 index fell 1.13%, or 326.18 points, to 28,444.89, while the broader Topix index lost 0.62%, or 12.39 points, to 1,973.92.
Global markets endured a torrid September owing to growing concerns about inflation, spiking virus infections that are hobbling the economic recovery, and political gridlock in Washington that is pushing the United States towards a financially catastrophic debt default.
Meanwhile, Democrats continue to bicker among themselves over Joe Biden’s multi-trillion-dollar infrastructure and social care spending bill, leaving it in limbo.
The Federal Reserve’s plan to wind down its ultra-loose monetary policy and indications that it could hike interest rates as soon as next year have added to the gloom.
The release of US jobs data on Friday will be closely watched for a fresh idea about the health of the world’s biggest economy, with a strong reading likely to put pressure on the Fed to act sooner than later.
“Markets enter the fourth quarter navigating what is perhaps the most uncertain environment of the year,” said Julian Emanuel, a strategist at brokerage BTIG. “The end of 2021 is shaping up to be interesting indeed.”
Oil was flat ahead of a meeting between OPEC and its key allies to decide whether to ramp up oil production in a bid to calm overheated global energy prices.
Tokyo > Nikkei 225: DOWN 1.1% at 28,444.89 (close)
Hong Kong > Hang Seng Index: DOWN 2.2% at 24,036.37 (close)
Shanghai > Composite: Closed for a holiday
New York > Dow: UP 1.4% at 34,326.46 (close)
- AFP with additional editing by Sean O’Meara
Also on AF: