Asia’s main equity gauge is poised to succumb, joining four major regional benchmark indexes into bear-market territory. the MSCI Asia Pacific Index slipped 0.5 percent to 149.68 as of 10:10 a.m. in Hong Kong, taking its slump from a Jan. 26 peak to 20 percent.
This comes after most stock markets across the region plunged anywhere from 1 percent to 3 percent on Tuesday as concerns over geopolitical tensions, sell-side bulls wavering on the U.S. stock market, a possible slowdown in earnings and economic growth weighed on investor sentiment. The Shanghai Composite Index fell another 0.6 percent on Wednesday, after rising as much as 0.4 percent.
“We have embraced the fact that the low volatility period ended earlier this year,” said Felix Lam, fund manager for Asia Pacific equities at BNP Paribas Asset Management in Hong Kong. “When you enter into the second phase of the market cycle — either consolidation or correction — the volatility will increase like this, so when making investment decisions, we’re taking higher safety margins.”
The region’s equities have been pummeled as trade-war concerns made the Shanghai Composite Index one of the world’s worst for 2018. Signs of softer Chinese economic growth only made things worse, and the nation’s market lost its title as the second largest to Japan earlier this year.
The roller-coaster ride continued on Tuesday as the benchmark gauge slumped to end its biggest two-day advance in three years despite the government’s strong efforts to ease a liquidity crunch for private companies and shore up confidence in its stock market.
There were also localized reasons for the slumps in other countries, ranging from a weak currency and banking turmoil in India to higher inflation and a plunging peso in the Philippines. Geopolitical worries including escalating tensions between Saudi Arabia and the U.S. and a stronger U.S. dollar were the last stroke.
