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Nikkei Markets

Asian stocks resume slide amid concerns about US-China trade

Chinese automakers fall as Brilliance-BMW deal raises questions over ventures

HONG KONG (Nikkei Markets) -- Asian stocks outside of Japan resumed losses on Monday as worries over U.S.-China trade tensions continue to cloud investor sentiment.

The Nikkei Asia300 Index fell 0.95% to 1,197.84 following a 2.6% advance on Friday. The day's losses came despite an advance on Wall Street on Friday as market participants remained concerned about the path forward for Sino-American trade relations. Fears of capital outflows from emerging markets amid rising borrowing costs in the U.S. also resurfaced. The yield on 10-year U.S. Treasury notes rose for a second day on Friday, even as it came off seven-year highs reached earlier in the week. The Nikkei Asia300 Index had shed 2.9% last week alongside a selloff in global equities.

"For investors to confidently buy the dips, they require two criteria to be met. One, which is the most important, is corporate profits must remain robust, and two, the U.S. and China need to cut a deal on trade," Hussein Sayed, chief market strategist at FXTM, wrote in a note. "If those two criteria are not met, then stocks might have already peaked for 2018."

Tencent Holdings, one of Asia's most valuable companies, fell 1.9% after an 8% jump on Friday helped the stock snap a 10-day losing streak.

Air China fell 2.1%. Late Friday, the airline said the number of passengers it carried in September increased 4.9% from a year earlier to 8.91 million, slowing from a 9.4% rise in August.

Guangzhou Automobile Group fell 2.5% despite reporting a 5.8% increase in total sales volume in September to 198,034 units.

The losses came alongside weakness for other Chinese automakers amid worries that competition from imported brands will intensify. German automaker BMW last week said it will raise its stake in its joint venture with Brilliance China Automotive Holdings. That deal is credit negative for Chinese automakers that have joint ventures with foreign automakers, Moody's Investors Service said in a statement on Monday.

Great Wall Motor and Dongfeng Motor Group fell 2.9% and 3.8% respectively, while BYD ended little changed.

Samsung Heavy Industries climbed 0.7% in Seoul after saying it signed a construction contract worth 211.8 billion won ($187 million).

Dr. Reddy's Laboratories rose 4.5% in Mumbai after saying it agreed to sell its active pharmaceutical ingredient (API) manufacturing business unit in the southern Indian city of Hyderabad. Financial terms of the deal were not disclosed.

PetroChina and CNOOC rose 0.7% and 0.6%, respectively, in Hong Kong after Brent crude futures rose 1%.

Maruti Suzuki India, the nation's largest carmaker, fell 1.4% after data from the Society of Indian Automobile Manufacturers, or SIAM, on Friday showed passenger vehicle sales fell 5.6% on-year in September. Mahindra & Mahindra, which makes sports utility vehicles, lost 2.6%.

--Suzannah Benjamin

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