(Bloomberg) -- Asian stocks outside of Japan declined, dragged down by losses in Hong Kong-listed Chinese technology shares as Donald Trump looked poised to return to the White House.
The MSCI Asia Pacific Excluding Japan Index slid as much as 1.1% Wednesday, with Alibaba Group Holding Ltd. and Meituan among the biggest drags on the benchmark. The losses came as Trump was projected as the winner of the US presidential election across pivotal swing states, with the Republican Party set to control the Senate.
The Hang Seng China Enterprises Index closed down 2.6%, leading losses in Asia. The decline in Hong Kong equities — which are more closely linked to external events and global money flows — reflected international investors’ concerns about a second term for Trump, which may bring about heightened trade tensions and policy surprises. Stocks listed in mainland China incurred narrower losses amid expectations of more stimulus measures from policymakers.
In the latest signal of Beijing’s support for growth, China’s central bank chief pledged to maintain an accommodative monetary policy stance and to double down on countercyclical adjustments to bolster the economy. Investors are keenly tracking a key Chinese legislature meeting this week that may unveil ramped-up fiscal spending.
“If Trump does win, I think he will put pressure on Asian markets overall — clearly with a huge focus on China,” said Nick Twidale, chief analyst at AT Global Markets Australia. “Bigger players will want to square or have smaller exposure in the current market.”
There are concerns among investors that another Trump presidency may keep inflation elevated and introduce high tariffs, complicating the Federal Reserve’s task to achieve price stability and boding ill for Asia’s export-driven economies. The MSCI Asia ex-Japan benchmark is up about 13% this year, trailing gains on Wall Street.
Trump trades gaining ground “could be a mixed message for Asian equities,” said Charu Chanana, chief investment strategist at Saxo Markets. “While his pro-growth policies could spill over the tailwinds to Asia, threats of tariffs and a stronger dollar will have be to assessed as well.”
In Japan, stocks rallied after a stronger dollar weighed on the yen, which typically benefits the country’s export-oriented economy. Shares in Australia and India also advanced.
Sectors to Watch
- Shares of Bank Mandiri, Bank Rakyat Indonesia and other lenders slide after Indonesia President Prabowo Subianto signed a regulation to cancel as much as $550 million of bad loans owed by small businesses.
- Shares of India’s electronics manufacturers rise on bets that Donald Trump winning the US election would intensify US companies’ supply chain diversification away from China in favor of countries like India.
- Asian defense stocks, including shipbuilder Austal and Hanwha Aerospace, jump as the chance of victory grows for Donald Trump in the US presidential election.
- Asian stocks tied to chips and electric vehicles trade mixed, while those tied to cryptocurrency and defense rise as the odds of Donald Trump winning the US election rise in betting markets.
- Japan’s bank shares jumped, as 10-year government bond futures slid with Donald Trump taking an electoral lead.
- Most cryptocurrency-related stocks in Asia follow Bitcoin higher as odds of Donald Trump winning the US election rise in betting markets after he won several states.
- Shares of Guotai Junan and Haitong Securities rally after the Shanghai government approved the merger of the two companies.
- Chinese aviation and aerospace shares advance for a second day after President Xi Jinping stresses the need to build a strong modern air force.
Markets at a Glance
- MSCI Asia Pacific Index fell 0.3%
- Japan’s Topix Index rose 1.9%; Japan’s Nikkei Index rose 2.6%
- China’s CSI 300 Index fell 0.5%; Hong Kong’s Hang Seng Index fell 2.2%; Hong Kong’s Hang Seng China Enterprises Index fell 2.6%
- Taiwan’s Taiex Index rose 0.5%
- South Korea’s Kospi Index fell 0.5%; South Korea’s Kospi 200 Index fell 0.3%
- Australia’s S&P/ASX 200 Index rose 0.8%; New Zealand’s S&P/NZX 50 Gross Index fell 0.1%
- India’s NSE Nifty 50 Index rose 1.1%
- Singapore’s Straits Times Index rose 0.4%; Malaysia’s KLCI Index rose 0.6%; Philippines’s PSEi Index fell 1.3%; Indonesia’s JCI Index fell 1.3%; Thailand’s SET Index rose 0.1%; Vietnam’s VN Index rose 1.2%
- 10-year Treasury yield rose 13 basis points
- Cboe Volatility Index fell 1.49 points
- Bloomberg Dollar Index rose 1.4%
- West Texas Intermediate crude fell 1.5% to $71 a barrel
- Euro fell 1.7%
Here Are the Most Notable Movers
- Shares of a Chinese company that sounds like “Trump wins big” to Mandarin speakers jumped as Donald Trump widened his lead in the US presidential vote, while a stock that sounds like Kamala Harris declined.
- Toyota rises 1.7% after the automaker boosted its FX assumption forecast for the full year.
- Mercari shares plunge 16% after the Japanese online marketplace reported first-quarter operating income that missed the average analyst estimate.
- Nintendo shares rebounded Wednesday, despite the Japanese games maker cutting its operating profit guidance, as investors shifted their focus to the outlook for the Switch 2 console.
Notes From the Sell-Side
- A growing number of Wall Street strategists are predicting that a decision in the US presidential election will set the stage for stocks to rally into the end of 2024, building on a 21% gain this year for the S&P 500 Index.
Related Market News
- Taking Stock: Asian earnings forecasts are showing signs of deterioration, hurting sentiment further after regional stocks’ weekly decline hit its longest stretch since September 2022.
- Inside Asia: All Asian currencies weaken as US election results point to Donald Trump’s widening advantage — an outcome that favors the dollar. Chinese state-owned banks were reported to be selling dollars to support the yuan, while Bank Indonesia said it stands ready to steady the rupiah.
- Global Wrap: Donald Trump’s rising presidential prospects rippled through global markets on Wednesday, with US stock futures rallying, Treasury yields jumping and the dollar surging the most since March 2020.
This story was produced with the assistance of Bloomberg Automation.
--With assistance from Winnie Hsu and Abhishek Vishnoi.
(Updates with latest stock moves.)
©2024 Bloomberg L.P.