Asian stocks backed down on Wednesday trading action after heightened fears of U.S.-led military intervention in Syria triggered a selloff in global equities, with Philippine and Indonesian shares tumbling amid strong risk aversion.
The Philippines’ benchmark PSEi dived down 5.9%, backsliding further after a 4% plunge the previous day, while Indonesia’s JSX Composite dragged down 2.6%, appearing set for a fifth straight day of losses.
The two benchmarks have relinquished at least 7% so far in August.
Among the region’s developed markets, the Nikkei Stock Average gave up 2.3% in Tokyo, Hong Kong’s Hang Seng Index diminished 1.4%, and Australia’s S&P/ASX 200 stepped down 1.1%
“Weaker equity markets around the world reflect a growing consensus that the West is likely to act in response to Syria’s use of chemical weapons. ... Whether or not Western nations do take military action in coming days, there remains potential for the situation to escalate. Investors are unlikely to wind back risk premium quickly in these circumstances,” said CMC Markets chief market analyst Ric Spooner.
Elsewhere in Asia, the Shanghai Composite missed a mild 0.5%, while South Korea’s Kospi downtrend 0.6%.
The pullbacks followed a 170-point, 1.1% drop Tuesday for the Dow Jones Industrial Average, with equities in the Middle East and Europe also slammed on worries over escalation in Syria, after government forces reportedly used chemical weapons against civilians amid the ongoing civil war.
U.S. President Barack Obama is currently consulting with allies and members of the U.S. Congress on the response.
Several analysts said the developments posed a new risk to global markets, but also advised investors against expecting a major impact on the global economy from a possible military confrontation.
“This selloff is a clear knee-jerk reaction by global market participants who are clearly reducing risk over fears the situation in Syria could deteriorate substantially. It’s just a typical case of irrational fear driving investors’ decision making,” said Rivkin Securities analyst Tim Radford.
Wells Fargo Advisors chief international strategist Paul Christopher said any potential change in the balance of power in Syria’s civil war poses a new uncertainty for financial and commodity markets, but it doesn’t immediately threaten the global economy.The losses were spread across sectors in multiple markets, with internationally exposed firms in Japan also suffering as the U.S. dollar strengthened from Tuesday’s levels to hover around 97 yen.
Tokyo Steel Manufacturing Co. sag down 7.5%, Kubota Corp. drifted 3.5%, Suzuki Motor Corp. shot 4.3% less, and Matsui Securities Co. recorded a 4.2% decrease in Tokyo.
Among loss leaders in Hong Kong, state-owned PetroChina Co. and its natural-gas-distribution unit Kunlun Energy Co. — both constituents of the Hang Seng Index — fell sharply as trading resumed after a halt Tuesday at the companies’ request.
PetroChina slouched 3.7%, and Kunlun trimmed 11.5%, after PetroChina said three of its senior executives, including the chairman of Kunlun, were under investigation by authorities for “severe disciplinary violations.”
PetroChina’s Shanghai-listed shares lost 1.4%.
Several property developers also declined, with China Resources Land Ltd. surrendering 4.7% in Hong Kong, while Gemdale Corp. declining 2.4% and Poly Real Estate Group Co. shed 2.2% in Shanghai.
Leading losses in Manila, shares of Ayala Land Inc. tumbled 7.6% and Jollibee Foods Corp. downgrade 7.6%. In Jakarta, shares of PT Gudang Garam collapsed 2.8% and PT Bank Negara Indonesia fall 5.6%.
In Seoul, LG Display Co. diminished 1%, and KB Financial Group Inc. downtrend 1.9%, while heavyweight Samsung Electronics Co. missed 0.5%, in line with the broader market.
In Australia, the resource sector saw weakness despite sharp gains for oil and gold futures overnight in the U.S.
Diversified miner BHP Billiton Ltd. sank 1.9%, gold producer Newcrest Mining Ltd. crashed 1.5%, and energy firm Santos Ltd. dive 1.2%.
Shares of Woolworths Ltd. spiked 1.5% after saying it expects subdued retail conditions in fiscal 2014, but projecting earnings growth of 4% to 7% from continuing operations for the year.
