The stock markets that were trading in Asia on Monday were in the red as they closed, with Hong Kong’s bourse leading the losses as Evergrande shares plunged.
Traders in Japan were taking a day off for Respect for the Aged Day, while those in mainland China were celebrating the Mid-Autumn Festival, and in South Korea it was the ‘Chuseok’ harvest festival.
The yen was gaining on the dollar, last sitting 0.25% stronger to change hands at JPY 109.66.
Hong Kong’s Hang Seng Index plunged 3.3% by the end of the day, closing at 24,099.14, as China Evergrande Group slumped 10.24%.
Its peers in the property development sector were also in negative territory, with the Hang Seng Properties Index falling 6.69% to a 52-week low.
Evergrande – the second-largest property developer in China – owes around $300bn to contractors, investors and residential clients.
Markets have been expecting the company to default on some of its repayments in the coming days, amid a regulatory clampdown from Beijing on the highly-leveraged development sector in China.
Such a default could have a knock-on effect through the rest of the sector and across China’s economy.
Insurance names were on the back foot as well, with AIA down 4.94% and Ping An Insurance 5.78% weaker.
“With Japan and mainland markets in China closed today, this morning’s Asia session has been a negative one as concerns over the future of Chinese real estate company Evergrande increase further sending the Hang Seng sharply lower,” said CMC Markets chief market analyst Michael Hewson.
“As we come to the end of the month, it looks increasingly likely that we’ll see the first negative month since January for the S&P 500 and the DAX, with the bigger question being have we seen the highs for this year, or is this just another opportunity to buy the dip?”
Oil prices were lower at the end of the Asian day, with Brent crude last down 1.94% at $73.88 per barrel, and West Texas Intermediate losing 2.22% to $70.37.
In Australia, the S&P/ASX 200 slid 2.1% to 7,248.20, with mining plays in the red amid the fears for China’s economic stability.
BHP was down 4.16% in Sydney, while Fortescue Metals lost 3.73% and Rio Tinto was off 3.6%.
Across the Tasman Sea, New Zealand’s S&P/NZX 50 was 0.42% weaker at 13,178.58, led lower by payments technology firm Pushpay, which lost 4.59%.
The down under dollars were both weaker against the greenback, with the Aussie last off 0.44% at AUD 1.3814, and the Kiwi retreating 0.18% to NZD 1.4234.
