HONG KONG: Asian shares slumped on Friday, plunging deeper into the red after weak manufacturing data from China fueled panic among investors over the clouding outlook for the world economy.
The dollar notched more losses against the euro and yen after minutes from the US Federal Reserve dampened hopes for a rate rise next month, while Asia-Pacific currencies were hit by concerns about regional growth.
Shanghai shares closed down 4.27 percent, or 156.55 points, at 3,507.74, ending their worst week since 2011 as worries over the flagging economy and the possibility of weaker government support weighed.
China’s benchmark index closed at almost exactly the same level as the bottom of a recent market rout on July 8, before Beijing stepped in with a vast rescue package for equities.
Hong Kong fell 1.53 percent, or 347.85 points, to finish the day at 22,409.62—its lowest point since May 2014—taking it into a bear market after a more than 20 percent slump from its April peak.
Tokyo shares fell 2.98 percent, or 597.69 points, to finish at 19,435.83, a more than three-month low and down 5.28 percent on the week.
Seoul fell 2.01 percent, or 38.48 points, to 1,876.07 as tensions climbed with North Korea, and Sydney dropped 1.40 percent, or 73.98 points, to close at 5,214.60.
“It seems like we’re seeing the makings of the 1997 Asian financial crisis all over, with emerging-market currencies plunging,” Nicholas Teo, a strategist at CMC Markets in Singapore, told Bloomberg News.
“China’s knock-on effect on the rest of the world is huge and China’s deepening economic slowdown will have an impact for the next couple of months or so.”
Asia got a negative lead from Wall Street after US shares sank more than 2.0 percent Thursday, with the Dow dropping to its lowest level for 2015.
Gold gained as investors looked for safer bets, rising to $1,150.67 in Asia compared to $1,138.80 late Thursday.
Sea of red
Market sentiment has nosedived since China’s central bank devalued its currency last week in a surprise move widely seen as aimed at boosting the country’s flagging exports.
Stoking concerns, the preliminary reading of Caixin’s Purchasing Managers’ Index (PMI) came in at 47.1 this month, its worst reading since March 2009 and significantly below analysts’ forecasts.
“Global markets are in panic mode as the full scale of China’s slowdown becomes clearer and the market pricing for a Fed September rate hike is unwound,” said Angus Nicholson at IG Markets.
“China’s currency devaluation, further stock market declines, and now another weak PMI appear to have put it front-and-center in investors’ minds.”
Commodity shares continued their slide as concerns about a slowdown in China, the world’s top importer of industrial metals and energy, continued to weigh.
A slump in raw materials prices has wiped off some $2 trillion from commodity stocks since the middle of last year.
US benchmark West Texas Intermediate (WTI) for October delivery, a new contract, lost 27 cents to $40.78 a barrel in afternoon trade, while Brent crude for October tumbled 32 cents to $46.30 a barrel.
The WTI September contract closed 32 cents higher at $41.14 in New York on Thursday, marginally higher than recent six-and-a-half year lows.
Analysts said oil held above the key $40 a barrel level thanks to a weaker greenback, which makes it cheaper for international investors to buy dollar-denominated oil.
Investors will be watching the weekly US oil rig count, due out on Friday, to see if a slump in crude prices has started to dampen production in the world’s top economy.
In currency markets, the dollar stood at 122.97 yen, down from 123.38 yen in New York on Thursday.
The euro rose to $1.1255 and 138.39 yen, compared with $1.1241 and 138.69 yen in New York.