China’s Shanghai Composite index crashed to its lowest level since May 11, underperforming the region on a downbeat Friday.
Dwindling hopes of a Greek deal weighed on sentiment, as the Eurogroup meeting of finance ministers quickly ended without any signs of an agreement on Thursday. German chancellor Angela Merkelsaid a euro zone finance ministers’ meeting over the weekend would be decisive for finding a solution to Greece’s debt crisis.
Overnight, U.S. equities finished a quiet session with modest losses, as a lack of resolution between Greece and its foreign creditors kept traders on the sidelines. The Dow Jones Industrial Average and S&P 500 shed 0.4 and 0.3 percent, respectively, while the tech-heavyNasdaq slipped 0.2 percent.
Shanghai Comp slumps 7%
The Shanghai bourse accelerated its pace of decline in the afternoon session, extending Thursday’s violent sell-off precipitated by increasing signs of deleveraging and persisting concerns over a flood of new-share listings. The benchmark index closed down 3.4 percent in the previous session.
“Tighter margin financing seems to have deflated the Chinese equity run… Margin debt fell for a fourth day on Thursday, with the outstanding margin loans on the Shanghai Stock Exchange dropping by 1 percent. The margin debt level has fallen 4 percent since Thursday 18 June,” IG’s market strategist Bernard Aw wrote in a note.
With margin lending being a key driver of the mainland’s stock market, a sudden shift in sentiment among margin traders could put the brakeson the blistering run-up, analysts warned.
The blue-chip CSI 300 index plummeted 4.6 percent after lunch, while the smaller Shenzhen Composite retreated 6.6 percent to its lowest level since May 19. The start-up ChiNext board was the hardest-hit, diving 7 percent to a more than one-month low.
Some experts have also issued bubble warnings after the Shanghai Composite soared more than 150 percent over the past year.
After being the worst performing stock market for 6 years, the domestic A-share market caught up with a vengeance [but] a rise of 150 percent in a short period of time is excessive by any standard of imagination,” Stephen Roach, senior fellow at Yale University, told CNBC Asia’s “Squawk Box.”
“Even though the market is not terribly overvalued in a forward PE basis, the rate of acceleration is a classic bubble and some of that is coming off right now,” Roach added.
By contrast, Guotai Junan Securities — China’s third-largest brokerage by profits — leaped 44 percent on its market debut in Shanghai. The listing follows an initial public offering (IPO) which raised 30.1 billionyuan ($4.85 billion) and will be China’s largest IPO since 2010.
Nikkei sheds 0.1%
Japan’s Nikkei 225 index nursed modest losses even though the data deluge released before the market open came in better than expectations.
Japan’s core consumer price index (CPI) ticked up 0.1 percent from a year earlier in May, just a tad above Reuters’ expectations for a flat reading. The unemployment rate was steady at 3.3 percent in May, in line with expectations, while household expenditures beat estimates to rise 4.8 percent on-year. According to a Reuters poll, household spending was expected to gain 3.4 percent on-year.
Construction and mining equipment maker Komatsu extended losses to drop nearly 2 percent.
Meanwhile, airbag manufacturer Takata‘s chief executive broke his silence on Thursday and apologized after months of avoiding the spotlight. Shares of the company, which made faulty airbags that triggered the largest recall in automotive history, slipped 0.1 percent.
ASX skids 1.5%
Australia’s S&P ASX 200 index hit a one-week low amid a broad-based selldown.
Market bellwether BHP Billiton led losses in the mining sector with a plunge of 3.4 percent, after iron ore prices slipped to $61.30 a tonne overnight. Energy plays also suffered heavy declines, with Santos andWoodside Petroleum shaving off more than 1 percent each.
Bradken widened losses to more than 10 percent after announcing that it received a merger approach from a unit of Chile’s Sigdo Kippers.
Shares of Qantas threw away 2.2 percent on news that the Hong Kong Air Transport Licencing Authority (ATLA) rejected the national carrier’s application to start a new budget airline.
Outperforming the bourse, Woolworths surged 4 percent on speculation that it could be a takeover target.
Kospi adds 0.5%
South Korea’s key Kospi index reversed a disappointing open to touch its peak in more than 3 weeks, thanks to a rebound in index heavyweights.
Snack maker Orion tumbled 5.5 percent following its announcement that it submitted a preliminary bid on Wednesday for Homeplus, British retailer Tesco‘s South Korean unit.