By Ese Erheriene
Stock markets were broadly lower in Asia on Monday, with Hong Kong lagging behind the region as China-related firms pulled back.
An early lift for Asian technology stocks dissipated, and technology hub Taiwan’s main Taiex reversed gains and ended down 0.1%. Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -0.42% fell 0.3%.
Japanese shares, meanwhile, pared gains even as the Japanese yen weakened against the U.S. dollar.
U.S. President Donald Trump began his five-country Asian tour by visiting Japan, which has the world’s third-largest economy.
In Hong Kong, the Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -0.89% finished nearly 7 points lower, but it had fallen about 1.5% during the session amid declines in Chinese financial and property stocks. The Hang Seng China Enterprises Index /zigman2/quotes/210598031/delayed CN:160462 -1.19% , which tracks the movement of Chinese companies, known as H-shares, fell 0.7%.
Investors took profit amid comments from China’s central bank governor Zhou Xiaochuan about rising risks to China’s financial system, said Ivan Ip, a stocks strategist at UOB Group. The news reignited worries of a crackdown on leverage on the mainland, he said.
Zhou wrote in an article, posted Saturday on the website of the People’s Bank of China, that the risks of China’s financial system are increasing. He described the risks as being “hidden, complex, sudden, contagious and hazardous.”
Meanwhile, political unrest in Saudi Arabia also added to investor jitters in Hong Kong, following a corruption crackdown that resulted in a wave of arrests by the Saudi authorities of royals and cabinet ministers.
“Hong Kong didn’t get a chance to respond to the situation over the weekend [and] everything risky in the overseas market affects Hong Kong more than in other Asian markets,” said Hao Hong, head of research at BOCOM International.
Shares of banking giants ICBC /zigman2/quotes/201401473/delayed HK:1398 +0.26% and China Construction Bank /zigman2/quotes/208974133/delayed HK:939 +0.85% 1.4% and 1%, respectively. Among developers, China Evergrande /zigman2/quotes/208605330/delayed HK:3333 +8.55% and China Vanke /zigman2/quotes/203851375/delayed HK:2202 -1.83% declined 3.3% and 0.9%, respectively.
Meanwhile, news that Qatar Airways was buying a 9.6% stake in Hong Kong’s Cathay Pacific /zigman2/quotes/203532437/delayed HK:293 +0.37% came as a major surprise to the market as well as to the Asian airline. Cathay, in a brief statement, said it was looking to continue its constructive relationship with the Qatar carrier.
However, it asserted Swire Pacific /zigman2/quotes/209399758/delayed HK:19 -0.92% and Air China /zigman2/quotes/203408003/delayed HK:753 -1.27% still control nearly 75% of the airline. Qatar bought the Cathay stake from Kingboard Chemical, which has been amassing shares in the airline for some time.
Nonetheless, investors were clearly concerned about a company known for its ownership stability, with shares down 1.5%.
What to expect from Trump's trip to Asia
President Donald Trump is going to spend a fascinating and important week in Asia. Mr. Trump is going to be there for 10 days, going to hit five countries and do two international summits. WSJ's Gerald F. Seib tells us what to expect from the trip. Photo: Getty
Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK +0.29% ended up 9.23 points at 22,548.35 as traders returned after a three-day weekend. The yen’s decline /zigman2/quotes/210561789/realtime/sampled USDJPY +0.0351% steepened against the U.S. dollar as Bank of Japan Gov. Haruhiko Kuroda said the central bank would be patient about easing.
The weaker yen did drive Japanese export shares higher, with Fast Retailing /zigman2/quotes/200663563/delayed JP:9983 +1.26% rising 2.2%, Honda Motor /zigman2/quotes/200490352/delayed JP:7267 +0.40% up 1.8%, and Suzuki /zigman2/quotes/201794956/delayed JP:7269 +0.70% rising 0.8%.
The dollar /zigman2/quotes/210598269/delayed DXY -0.11% was also broadly higher against regional currencies during Asian trade, following Friday’s improvement in U.S. employment data.
The Shanghai Composite /zigman2/quotes/210598127/delayed CN:SHCOMP +0.16% rose 0.5% but New Zealand’s NZX50 /zigman2/quotes/211587880/delayed NZ:NZ50GR -0.36% shed 0.1%. Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -0.07% slipped 0.1%. There, Westpac Banking /zigman2/quotes/203084975/delayed AU:WBC +0.17% fell 2.2% after its earnings report.
“On headline numbers alone there seems little to inspire and that will disappoint the index bulls, given the ASX financial sector is failing to contribute to the ASX rally,” said Chris Weston, chief market strategist at IG Group.