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Chinese companies pull Nikkei Asia300 lower amid high funding costs

Samsung Electronics drops 5.1% after Morgan Stanley downgrade

HONG KONG (Nikkei Markets) -- Asian stocks outside of Japan fell Monday, led by losses in Chinese companies, as investors remained concerned about elevated funding costs in the world's second-largest economy.

The Nikkei Asia300 Index lost 1.1% to 1,404 after adding 1.9% last week. Mainland lenders Industrial & Commercial Bank of China (ICBC) and China Construction Bank (CCB) fell 0.8% and 0.9% respectively in Hong Kong, while Ping An Insurance Group slid 2.7% following a 6.2% increase last week.

In China, consumer electronics maker TCL fell 1.4% in Shenzhen for its fourth consecutive decline, while SAIC Motor lost 0.5% following a 4% drop last week.

Losses for Chinese companies came after the yield on the nation's 10-year Treasury note ended unchanged at 3.98%, trading within a striking distance from its three-year high. The Nikkei Asia300 China Index shed 1.3%, while Hong Kong's gauge slipped 0.6%.

"Whether the selloff is a slight correction after a strong surge in 2017, or steeper declines on the way, remains to be seen," Hussein Sayed, chief market strategist at FXTM, wrote in a note. "However, rising bond yields, particularly junk bonds, should keep investors worried."

Asian markets shrugged off a record-setting session on Wall Street on Friday that saw the S&P 500 Index end above 2,600 points for the first time.

The country gauge for South Korea slumped 2.4%, weighed down by losses in heavyweight Samsung Electronics. The technology giant shed 5.1%, its worst single-day loss in 2017 so far, after Morgan Stanley cut its rating on the stock to "equal weight" from "overweight" and lowered its price target. Chip-maker SK Hynix lost 2.4%.

Singapore's gauge slipped 0.1%, weighed down by heavyweight lenders. DBS Group Holdings and United Overseas Bank shed 0.9% and 0.8%, respectively.

The Nikkei Asia300 ASEAN Index was little changed.

India's gauge edged 0.1% lower as information technology major Infosys fell 1.2% after rising 4% last week. Oil & Natural Gas Corp. advanced 1.4% as U.S. crude oil prices remained near two-year highs.

Sun pharmaceutical Industries added 0.6%. The drugmaker fell as much as 1.9% earlier after saying it will recall two batches of its oral diabetes drug Riomet due to microbial contamination.

--Amy Lam and Suzannah Benjamin

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