Market Close Sep 09

Markets roiled by tech sell-off

Concern about the tech sector has extended to broader markets and hit risk sentiment partly because of the falling oil price and negative Brexit headlines, analysts say

Markets roiled by tech sell-off
SoftBank shares have lost $17 billion in market valuation this week. File pic by Reuters.

(ATF) Hong Kong: Asian markets were hammered as investors dumped risk assets after a bruising session overnight at Wall Street.

The prospects of an early vaccine in the market became uncertain after an AstraZeneca Covid-19 vaccine study was put on hold due to suspected adverse reaction in a participant in the UK.

But an AstraZeneca spokesman told Asia Times Financial: “As part of the ongoing randomised, controlled global trials of the Oxford coronavirus vaccine, our standard review process was triggered and we voluntarily paused vaccination to allow a review of safety data by an independent committee.

“We are working to expedite the review of the single event to minimise any potential impact on the trial timeline. We are committed to the safety of our participants and the highest standards of conduct in our trials."

SoftBank hit

In Asia, Japan’s benchmark Nikkei 225 fell 1.04%, weighed down by the technology giant SoftBank whose shares fell 2.87%. SoftBank’s shares have taken a hit after reports emerged about its risky bets on the technology sector, which made investors reconsider its valuation multiple. Its shares have lost $17 billion in market valuation this week.

“Selling pressure is a little broader as the concerns in the tech sector are extending across broader markets and impacting risk sentiment. The fall in the oil price and negative Brexit headlines are contributing,” Kerry Craig, a global market strategist at JPMorgan Asset Management, said.

“The rise in safe havens, such as the US dollar, Japanese yen and gold, are further evidence of more defensive investor positioning. However, broad pillars of support for the equity market remain intact.”

Australia’s S&P ASX 200 tumbled 2.15%, China’s CSI 300 benchmark retreated 2.34% and Hong Kong’s Hang Seng index eased 0.63%.

The dollar extended its recovery with the unit trading at 93.61 against a basket of currencies while US Treasuries were also firm with the 10-year yield down a basis point to 0.67%.

The fact that investors were not piling into gold, which is trading flat, and the yen, which is only marginally up, meant this was not a flight to safety but rather a correction in markets.

“There is room for this to go further, if stocks are to more plausibly reflect the macro and pandemic reality. But at this stage, there is still no panic in evidence, and that is encouraging,” ING regional head of research Robert Carnell said. “That also means it is unlikely that we will see any knee-jerk policy reaction from central banks or governments. When you juice markets this hard, you have to imagine the occasional pip will stick in your throat.”

Asian credit markets were also edgy amid the risk offloading in other markets, with the Asia IG index a basis point wider at 59/60. But it is expected the steady stream of issuers raising debt will continue. South Korea’s 10-year sovereign bond offering, Linyi City Construction 3-year bonds, and Guangzhou City Metro’s 5/10yr bond offerings are in the market.

ATF China Bond 50 Index: Banks extend ATF indices losses

Also on Asia Times Financial

China factory deflation, retail inflation ease 

Baidu, investors in talks to raise $2 bn for biotech startup 

Domestic tourism offsetting the loss of foreign visitors in Asia 

Man with the plan for a richer Indonesia 

Foreign Exchange: No lasting yuan impact from US tech stock rout

Asia Stocks

# Japan’s Nikkei 225 index fell 1.04%

# Australia’s S&P ASX 200 eased 2.15% 

# Hong Kong’s Hang Seng index retreated 0.63%

# China’s CSI300 tumbled 2.34%

# The MSCI Asia Pacific index dropped 1.22%.

Stock of the day

CanSino Biologics rose as much as 7.5% after it defended its coronavirus vaccine candidate at an investor conference.