Asian stocks fall as China heads towards banking crisis
Asian stocks declined early on Monday as the region fell deeper into financial uncertainty. After the worse than expected data that came out of China at the back end of last week, China saw its forecast for growth slashed by Goldman Sachs. Investors saw this as a signal that the country could be about to enter a banking crisis of a magnitude that Asia has never seen before.
The Chinese central bank, the People’s Bank of China, have released a statement within the last few hours insisting that banks and financial institutes across the nation will ultimately be held liable and will need to deal with the consequences of their own actions. This was a very clear statement from the central bank suggesting that they will not be bailing out banks in the same way that we have seen across Europe and the United States in recent years.
The Japanese Nikkei 225 slump 1.3 percent to end the session at 13,062.78, wiping out its earlier advance of 1.5 percent. The broader Topix declined by 0.9 percent, closing at 1089.64. The Hang Seng slid by 442.75 points, or 2.18 percent, ending the first trading session of the week at 19,820.60. The ASX 200 closed at 4669.10 after dropping 69.70 points, representing a loss of 1.47 percent.
China’s economic woes drag down many stocks across the region, particularly those linked to manufacturing in one way or another. A prime example of this was the decline of BHP Billiton which slumped 3.3 percent as the miner was hit by concerns for the long term demand of metals from the world’s largest exporter.
While the situation in Asia is causing concerns in the global markets as well, analysts expect those effects to ease as the economic situation in the West continues to steadily improve. Last week the MSCI All-Country World Index declined by 12 percent on the back of the Federal reserve’s confirmation that they will begin to taper monetary stimulus within the next six months if the US economy continues to exhibit signs of stability and growth. This decline equated to approximately $2 trillion being wiped off of equities worldwide over the course of just two trading sessions.
At the time of writing, futures for the S&P 500 had fallen by 0.5 percent as today’s events in Asia added to concerns that stocks would continue to decline further this week.