HONG KONG (Nikkei Markets) -- Asian shares outside of Japan plunged Monday as the U.S.-China trade war further intensified.
The Nikkei Asia300 Index of companies outside Japan fell 1.6% to close at 1,214.56.
Chinese companies were among the biggest contributors to the losses on the gauge. Chinese meat and food processing company WH Group, which has significant business interests in U.S., tumbled 7.1%. Heavyweight Tencent Holdings declined 2.5%, while China Life Insurance led financial firms lower, closing down 2.4%. An index of Chinese companies listed in Hong Kong, the Hang Seng China Enterprises Index, suffered its biggest decline in three weeks to end 1.8% lower.
After U.S. markets closed Friday, President Donald Trump announced that with effect from Oct.1, the U.S. will raise tariffs on about $250 billion of Chinese goods to 30% from the current 25%. Further, the tariff on $300 billion worth of goods that was to come into effect from Sept. 1 and Dec. 15 was raised to 15% from 10%. Prior to announcing the increased tariff, Trump said that American companies were "hereby ordered" to immediately begin looking for an alternative to China, including bringing the firms back home.
Trump's announcement came after Beijing said it will increase tariffs on $75 billion of additional U.S. goods. China had indicated last week that it would take retaliatory measures after Trump earlier this month broke the trade truce by proposing to impose tariffs on $300 billion of Chinese shipments.
On the back of the increased trade uncertainty, the Chinese yuan tumbled to more than 10-year lows. Yields on Treasuries fell. The 10-year yield is now closer to record lows.
Louis Kuijs, the head of Asia Economics at Oxford Economics said Friday's "tit-for-tat escalation shows how unlikely a trade deal and de-escalation have become."
"In an environment of mutual distrust, U.S. complaints and demands are wide-ranging and extending beyond economics, while China is increasingly preparing itself for long-term economic tension with the U.S. rather than aiming to achieve a deal," he said.
Asian equities, however, ended off their worst level of the day, after Trump reportedly said that he believed China wanted to make a deal and that Chinese officials had reached out to return to the negotiating table.
Meanwhile, Indian equities outperformed after the country's finance minister late Friday withdrew a proposed surcharge on taxes on foreign portfolio investors. The BSE Sensex closed 2.2% higher.
China Eastern Airlines, down 2.6%, led mainland airlines amid a tumbling yuan. On account of the high dollar-debt exposure, the sector is among the most vulnerable to the fall in the Chinese currency.
Shares of industrial commodity producers declined. World's second-largest zinc miner Vedanta fell 1.8% and Hindalco Industries, one of the biggest producers of primary aluminum in Asia, shed 0.8%. South Korean steel-making company POSCO closed 1.9% lower and Tata Steel declined 2%.
China Shenhua Energy dropped 2.5% after the coal miner's first-half net profit declined 1.1% year-on-year and revenues decreased 8.6%. China Petroleum & Chemical (Sinopec) slid 2.6% after its net profit in the same period fell 24.7%.
DRB-Hicom tumbled 11.9%. While the Malaysian conglomerate swung to a profit in the June quarter, the earnings missed expectations of a few analysts amid weaker-than-expected contribution from the automotive segment.
Petronas Dagangan fell 4.1% after Malaysian fuel retailer's second-quarter net profit fell 45% on-year.