Asian stocks fell sharply on Monday as concerns mounted around Country Garden, a major property developer in China which is now on the brink of default.
China’s new bank loans tumbled in July and other key credit gauges also weakened, deepening investor concerns about the health of the world’s second largest economy and sending the yuan to a six-week low.
A spike in the dollar index and bond yields also spurred risk aversion after Friday’s stronger-than-expected producer price data from the United States stoked concerns about the possibility of U.S. interest rates rising further.
Oil prices were down around 1 percent in Asian trade as China demand concerns overshadowed signs of escalating geopolitical tensions in the Black Sea.
Chinese shares edged lower as leading property developer Country Garden faced a potential bankruptcy that could shake the stuttering Chinese economy.
China’s benchmark Shanghai Composite index dropped 0.34 percent to 3,178.43 while Hong Kong’s Hang Seng index slumped 1.58 percent to 18,773.55 ahead of Chinese retail sales, industrial output and investment data due on Tuesday.
Country Garden Holdings shares plummeted 16.3 percent in Hong Kong after the company missed bond payments and warned of multibillion-dollar losses.
The company risks defaulting in September if it still cannot pay after a 30-day grace period.
Japanese shares tumbled as investors awaited direction from second quarter gross domestic product data due on Tuesday and inflation data on Friday.
The Nikkei average fell 1.27 percent to 32,059.91 and the broader Topix index settled 0.98 percent lower at 2,280.89, with chip, energy, airline and auto stocks pacing the declines.
Ship and machinery maker Mitsui E&S Co slumped 8.3 percent to lead losses while Nippon Sheet Glass soared 10.6 percent. Advantest lost 3.2 percent and Inpex Corp plunged 4.8 percent.
Seoul stocks fell for a third day running, with big-cap tech and battery companies leading losses on concerns about rising inflationary pressure in the United States. The Kospi average closed 0.79 percent lower at 2,570.87.
Australian shares hit a four-week low as miners tumbled on concerns over China’s property sector and heightened concerns about the country’s economic recovery.
The benchmark S&P/ASX 200 index fell 0.86 percent to 7,277 – marking its biggest drop since July 11. The broader All Ordinaries index closed 0.81 percent lower at 7,493.10. BHP, Rio Tinto and Fortescue Metals Group all ended down around 2 percent.
Across the Tasman, New Zealand’s benchmark S&P/NZX 50 index finished marginally lower at 11,826.42 ahead of Reserve Bank’s rate decision due on Wednesday.
Economists expect the central bank to keep the overnight cash rate steady at a more than 14-year high of 5.50 percent for a second straight meeting.
U.S. stocks ended narrowly mixed on Friday and Treasury yields rose after data showed producer prices rose more than expected in July while consumer confidence dropped for the first time in 14 months, raising much uncertainty about the outlook for inflation and interest rates.
The producer price index rose 0.3 percent from the previous month following a revised unchanged reading in June and expectations for a reading of 0.2 percent.
The annual rate of producer price growth reaccelerated to 0.8 percent from just 0.2 percent in June, as cost of services increased.
The tech-heavy Nasdaq Composite gave up 0.6 percent to reach its lowest closing level in well over a month and the S&P inched down 0.1 percent while the Dow rose 0.3 percent.
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