Asia Stocks Slide as Korea Enters Correction, Japan Slumps

(Bloomberg) -- Asian stocks slipped, led by Japan and Korea, as surging commodity prices fueled concerns about global inflation.

The MSCI Asia Pacific Index lost as much as 1.7% Tuesday in its third day of declines, with technology stocks contributing most to the weakness. South Korea’s Kospi entered a technical correction, while Japan’s Nikkei 225 extended losses from its recent peak to almost 10%.

Concerns about inflation have intensified the rout in Asian equities, with the regional benchmark down more than 2% this month. It plunged 5.2% in the three months through September, snapping a five-quarter winning streak. A gauge of commodities soared to an all-time high as a resurgence in demand for raw materials collides with supply constraints.

“The fact is that there is a lot of uncertainty about the strength of the economic rebound, inflation pressures, geopolitics, climate change, etc.,” Olivier d’Assier, head of APAC applied research at Qontigo GmbH, wrote in an email.

A gauge of global stocks has dropped more than 5% from a record in early September as Treasury yields rose ahead of a looming reduction in Federal Reserve stimulus. Concerns over China’s corporate crackdown and a slowdown in its economy also sapped sentiment.

“The economy isn’t back to normal and still faces pandemic-related restrictions in several places, but markets have behaved as if things were back to normal,” d’Assier wrote. “This correction is just a reality adjustment.”

SECTORS TO WATCH 

• Makers of Covid vaccines and treatments including SK Bioscience followed their global peers lower for a second day after Merck & Co. said its experimental Covid-19 pill cuts the risk of hospitalization and death in half
• Indonesian mining companies extended this week’s rally, led by coal miner Bumi Resources and state-owned Timah, supported by high commodity prices
• Korean travel, casino, airline and consumer retail stocks rallied, defying the market’s broader rout, on expectations consumer spending will improve as health authorities consider adopting a “living with Covid-19” policy later this month
• Oil producers and refiners including Japan’s Inpex advanced as crude prices continued to jump, with OPEC+ agreeing to maintain gradual production increases

MARKETS AT A GLANCE

• MSCI Asia Pacific Index down 0.7%
• Japan’s Topix index down 1.3%; Nikkei 225 down 2.2%
• Hong Kong’s Hang Seng Index up 0.3%; Hang Seng China Enterprises down 0.1%
• Taiwan’s Taiex index up 0.3%
• South Korea’s Kospi index down 1.9%; Kospi 200 down 1.7%
• Australia’s S&P/ASX 200 down 0.4%; New Zealand’s S&P/NZX 50 down 1%
• India’s S&P BSE Sensex Index up 0.4%; NSE Nifty 50 up 0.4%
• Singapore’s Straits Times Index down 0.8%; Malaysia’s KLCI up 0.3%; Philippine Stock Exchange Index up 0.3%; Jakarta Composite down 0.9%; Thailand’s SET up 0.6%; Vietnam’s VN Index up 1.1%

ADVANCERS

• Redbubble jumped 7.2% to its highest level since Sept. 28 after Morgan Stanley initiated coverage of the art products distributor with an overweight rating
• Japanese insurer T&D Holdings added 1.6% after Morgan Stanley raised its rating on the stock to overweight from underweight, and upgraded its view on the industry to attractive from in-line

DECLINERS

• Fast Retailing fell 6.9%, the most since March 2020, after reporting Japanese Uniqlo same-store sales for Sept. fell 19% y/y
• Chinasoft International dropped 9.7%, the most since Aug. 17, after the software company agreed to sell as many as 162m new shares at HK$12.26 apiece in a placement
• Nagaileben, a maker of clothing for the medical industry, lost 8.4%, the most since December 2018, after forecasting a decline in operating profit

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