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Nikkei Markets

Asian stocks fall more as rising dollar aggravates selloff

South Korean companies, Chinese airlines slump

HONG KONG (Nikkei Markets) -- Asian shares extended losses on Thursday, weighed by a surging dollar and intensifying concerns over the impact of the coronavirus pandemic.

The Nikkei Asia300 index of companies outside Japan fell 4.4% to 994.89.

The losses came as the dollar index climbed to its highest level in three years. Increasing volatility in bond and equity markets and concerns of a dollar funding squeeze pushed up the gauge by 7% in eight sessions.

The dollar has surged against its major peers despite steps by the U.S. Federal Reserve in coordination with other major central banks to ensure liquidity.

Yesterday, U.S. equities fell alongside the Treasuries. Usually, a selloff in equities prompts investors into safe-haven bonds.

"If cash is king, then dollar cash currently is world president. Everything that could be sold was sold against the dollar," ING Bank said in a note. "If there is one currency causing problems right now and aggravating the selloff in global asset markets, it is the U.S. dollar."

The Indonesian rupiah led Asian currencies lower on Thursday, tumbling 4.6%. The South Korean won dropped 1.7% and the offshore Chinese yuan lost 1.1%.

Meanwhile, economists continued to cut their estimates of U.S. and global growth.

IHS Market said the rapid spread of the coronavirus virus beyond mainland China set the global economy up for the worst growth downturn since the 2008 financial crisis.

The U.S., Europe, and Japan are headed for recession, it said, adding that the U.S. economy will shrink by 0.2% this year. Japan's economy is expected to fall 0.7% and that of the Eurozone by 1.5%.

South Korean companies paced losses on the A300 gauge on Thursday. Samsung Electronics tumbled 5.8%, Hyundai Motor lost 10.3%, SK Hynix slipped 5.6%, and POSCO dropped 5.4%.

Circuit breaker on South Korea's benchmark equity index was triggered following an 8% fall, prompting a 20 minutes halt. The gauge closed 8.4% lower.

Hong Kong-shares of Chinese airlines fell after reporting declines in February operating numbers as the coronavirus outbreak hit air travel.

China Southern Airlines slumped 6.8% following an 85% plunge in February passenger traffic, while Air China skidded 8.6% after reporting an 83% drop in passenger traffic last month. China Eastern Airlines dropped 3.9% following an 87.5% tumble in passengers carried during February.

Tencent Holdings added 2.7% after the Chinese internet giant reported a 52% jump in fourth-quarter profit on the back of accelerating revenue from online games and financial technology services.

CK Infrastructure Holdings sank 12.6%. The company on Wednesday said net profit remained little changed last year while its turnover declined 4.7%.

--Nimesh Vora

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