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Stocks across Asia-Pacific markets are lower today amid rising
geo-political tensions in the region.

It follows a sell-off in overnight markets, as global stocks got
the jitters from rising levels of animosity between the US and
North Korea.

Overnight there was more tough rhetoric from US President Donald
Trump, who told reporters that his “fire
and
fury”
 comment “maybe
wasn’t tough enough”.

  • Australian stocks led regional markets lower this
    morning:
     The ASX dipped by 1.5% as
    major banks led the falls. The ASX200 has since rallied back
    slightly, but is still down more than 1% on the day. The Aussie
    dollar is also getting sold off in Asian trade after holding up
    relatively well overnight. A short time ago, it was down 0.37%
    against the US dollar at 0.7846 and had lost ground against
    each of the major currencies.
  • South Korean stocks opened 1.2%
    down:
     And declines have continued in
    midday trade, with the index falling by as much as 1.74%. That
    takes losses for the KOSPI index to around 3% this week, with
    South Korean stocks now well off the record highs they reached
    in late July. Not surprisingly, the Korean won is also lower,
    down a further 0.26% against the US dollar after losing 1.3%
    over the previous two days.
  • Turning to mainland
    China:
     China’s benchmark Shanghai
    composite index opened 0.6% lower, but has faced more selling
    and is now down by 1.6%. But the ChiNext index — which tracks
    small-cap Chinese stocks and is prone to bouts of volatility —
    was actually 0.26% higher in midday trade.
  • Hong Kong stocks dipped sharply at the
    open:
     Falls in China have been
    almost doubled by Hong Kong’s Hang Seng index, which were down
    by 1.2% shortly after the index opened at 11:30am AEST. Huge
    internet conglomerate Tencent Holdings, which is listed in Hong
    Kong, was down by more than 3%.
  • India follows its neighbours
    lower:
     India’s Nifty 50 index has
    dropped by 0.9% at the open. After breaking through 10,000 for
    the first time last Friday, the index has undergone a small
    correction with falls of 2.47% so far this week.

Although South Korean and Indian stocks have climbed to new
record highs this year as global capital moved into Asian
emerging markets, the research team at Capital Economics cited
three reasons why they don’t expect the recent growth to last.

“First, the ongoing hostility with North Korea is not only likely
to keep the MSCI Korea Index under pressure, but could also weigh
a little on equities elsewhere in the region,” Capital Economics
said.

They also forecast that China’s economy will lose some momentum
in the second half of the year, and don’t expect the same
conribution to recent growth from the huge IT companies (think
Samsung in South Korea, Tencent Holdings and India’s Infosys) in
the region.


MSCI chinaCapital
Economics

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