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Sep 12, 2016

Asian Markets Closing Report, by MarketWatch on September 12, 2016: Hong Kong Notches Biggest Drop Since February as Asian Stocks Plunge

Kenan Machado 
Asian shares started the week notably weaker as fears of a possible U.S. interest-rate increase gripped markets, with investors assessing the potential impact on growth.

“We are taking the selloff in the U.S. [on Friday] very, very seriously,” said Amir Anvarzadeh, global head of equity sales for Japan at BGC Partners. He said the equities weakness on both sides of the Pacific indicates a reversal in trend. “Whatever growth we are getting [globally] could slow down” if interest rates rise, Anvarzadeh added.
Emerging markets in Asia are particularly vulnerable to a rate increase in the U.S. as better returns there could prompt a flight of capital from less-developed areas. But some say strong growth and the potential for earnings to pick up faster in Asia will temper any sharp withdrawals.
After U.S. stocks on Friday posted the biggest declines since the initial post-Brexit drops, following a summer devoid of volatility in equities trading there, Australia’s S&P/ASX 200 XJO, -2.24% declined 2.2% Monday and Taiwan’s Taiex Y9999, -1.18%  dropped 1.2% — both finishing at their lowest levels in two months.
Hong Kong’s Hang Seng Index HSI, -3.36%  skidded 3.3% to 23,310.33, the biggest drop since February.
The Shanghai Composite SHCOMP, -1.85%  shed 1.9%, finishing at a 1-month low, and the Nikkei Stock Average NIK, -1.73% ended down 1.7%.
Korea’s Kospi SEU, -2.28% , which notched its largest decline in two months Friday, topped that with a 2.3% decline. Samsung Electronics Co. 005930, -6.98% SSNHZ, +0.00%   ,which makes up one-sixth of the index, notched its biggest decline in four years, with a 7% slide on more worries about the Galaxy Note 7.
Easy monetary policies have propped up asset prices globally since the financial crisis nearly a decade ago. “Record capital outflows from Japan in recent months, if not years, oiled the wheels of global finance,” said Frederic Neumann, co-head of Asian Economics Research at HSBC.
Alex Furber, a senior client services executive at CMC Markets in Singapore, added: “U.S. stocks were overvalued, and a correction there was due for some time.”
China sets record for world’s highest bridge — again
Chinese engineers Saturday completed the Beipanjiang Bridge, breaking another Chinese bridge's record as the highest in the world.
Monday’s weakness in Asian stocks was accompanied by sizable drops in commodities and pressured the equities of such companies. Three-month nickel futures fell 3.5% on the London Metal Exchange, while Brent oil LCOX6, -1.62%  was down some 1.5%, extending Friday afternoon’s slide in the U.S.
One bright spot Monday was Japanese life insurers, which gained on expectations that their investments abroad will yield higher returns. Dai-ichi Life Insurance Co. 8750, +2.29%   rose 2.3%, and T&D Holdings Inc. 8795, +2.06%   advanced 2.1%.
Also, the weaker rupee USDINR, +0.0167%  helped Indian outsourcing firms even as the S&P BSE Sensex 1, -1.58%  was down 1.4%. Infosys Ltd. 500209, +0.06% INFY, -0.12%  has gained 1.9%.