By DPA,
Tokyo : Concerns about higher interest rates and inflation sent Asia-Pacific stocks plunging Tuesday with China seeing the biggest declines, its largest in 16 months.
Shares in China’s two stock markets lost about 8 percent of their value as investors feared more tightening measures by the government after a weekend rise in the bank reserve ratio.
The key Shanghai Composite Index fell 7.73 percent to close at 3,072.33 while the smaller Shenzhen Component Index shed 8.26 percent.
State media said investors were “nervous” about the impact of the rise in the bank reserve ratio – the fifth this year – which follows a series of measures in recent months aimed at curbing inflation and overinvestment.
The central bank ordered banks to hold at least 17.5 percent of their deposits as reserves, which would cause them to lend less.
The tightened controls in China also hit Hong Kong, where capital inflows from mainland investors play a large role and where the Hang Seng Index plunged 4.21 percent to 23,375.52.
Also affecting both markets was a return to trading after a long weekend because of Monday’s Dragon Boat Festival. Analysts said Tuesday’s fall was a delayed reaction to losses on Wall Street Friday, disappointing unemployment figures in the United States and a spike in oil prices.
Australia was in the same boat, opening trading after a three-day weekend and seeing the ASX200 index dropping 2.8 percent to 5,283. Banks and industrials were the worst hit.
Losses in Tokyo were among the more moderate in the region as stocks there opened higher on a stronger-than-expected, seasonally adjusted 5.5-percent rise in core machinery orders in April.
But by the end of the day, the benchmark Nikkei 225 stock average had fallen 1.13 percent to 14,021.17 while the broader Topix index of all first-section issues was down 1.03 percent at 1,383.2.
Losses on India’s Sensitive index moderated late in the session, when it was trading down 1.17 per cent at 14,889.25 after heavy selling in the metals and real-estate sectors.
Taiwan’s Taiex fell 2.53 per cent to 8,370 with all sectors sliding and construction and financial services seeing the biggest drops.
Inflation was the biggest concern in the Philippines, where investors worried the inflation rate could hit double digits in June amid rising prices for fuel and food. The Philippine Stock Exchange’s 30-share composite index shed 3.42 percent to close at 2,645.95.
South Korea’s Kospi was down 1.91 per cent, Singapore’s Straits Times Index fell 1.65 percent, the Stock Exchange of Thailand Index dropped 1.69 percent and Vietnam’s Ho Chi Minh Stock Index slumped 1.61 percent.
Trading in New Zealand and Pakistan was mixed.