Market Close Mar 22

Risk appetite soured by Turkey

Sharp pull back after Turkey central bank chief removed; Japan automakers slammed on chip shortage fears; Australia outperforms on Crown Resorts bid

Risk appetite soured by Turkey
Turkey's new Central Bank Governor Sahap Kavcioglu sits at his office in Ankara. Photo: Reuters

(ATF) Hong Kong: Asian markets were broadly lower as an emerging-markets selloff triggered by the shock ouster of Turkey’s central bank governor sent investors scrambling for the safe havens.

Japan markets were hammered by chip-shortage concerns after a fire at semiconductor supplier Renesas Electronics hit shares of carmakers Honda Motor, Nissan Motor, and Toyota Motor.

Japan’s Nikkei 225 index slumped 2.07%, Hong Kong’s Hang Seng index eased 0.36% and regionally the MSCI Asia Pacific index slid 0.75%. Australia’s S&P ASX 200 advanced 0.66% as the benchmark was boosted by Crown Resorts shares, which rose after it received an $8 billion buyout offer. China was the other outperformer as shares rose after the central bank kept its benchmark lending rate for corporate and household loans unchanged. The CSI300 climbed 1.00%.

The focus of the market was Turkish President Tayyip Erdogan’s surprise decision to oust a hawkish central bank governor, intensifying concern over a full-blown currency crisis. The Turkish lira plunged 17% to a record low.

Safe havens

The currency briefly depreciated to 8.4850 to the dollar from 7.2185 on Friday, near its intraday record weakness of 8.58 from last November.

Safe havens gained with US Treasuries rallying as the 10-year yield plunged 5 basis points to 1.68%. But analysts expect yields to rise from here.

“We think that nominal bond yields can still shoot higher in the short term towards 2% and above on inflation concerns, especially as annual inflation will push to 3-4% per annum temporarily over the next few months because of base effects from 2020 and markets are likely to worry that this move is permanent, rather than temporary,” said Diana Mousina, Economist for Investment Strategy & Dynamic Markets, at AMP Capital.

Oil prices resumed their decline, falling on renewed concern that European coronavirus lockdowns could slow any recovery in demand for fuel products.

Brent crude was down 24 cents, or 0.4%, at $64.29 a barrel and U.S. oil was off by 32 cents, or 0.5%, at $61.10. Both contracts fell by more than 6% last week after making steady gains for months on the back of output cuts and an expected demand recovery.

“The oil market is searching for answers, with analysts linking the oil price collapse to slow European recovery due to lockdowns and slow vaccine rollouts,” said Stephen Innes, Chief Global Market Strategist at Axi.

“But the reality is that we’re still a long way from a full demand recovery, and it's the record levels of withdrawn production capacity that’s the main prop for the oil market. So, having crested $70/ barrel on sentiment alone, prices were always vulnerable to a pull-back.”

Also on Asia Times Financial

Asia Stocks

  • Japan’s Nikkei 225 index slumped 2.07%
  • Australia’s S&P ASX 200 advanced 0.66% 
  • Hong Kong’s Hang Seng index eased 0.36%
  • China’s CSI300 climbed 1.00%
  • The MSCI Asia Pacific index slid 0.75%.

Stock of the Day

Crown Resorts Limited shares rose as much as 22.8% after it received a received an $8 billion indicative proposal from the Blackstone Group that translated into a price of A$11.85 cash per share.