Asia’s biggest stock markets fell overnight as fears rose about the death toll from coronavirus in the US, Japan entered a new fiscal year on an unsteady footing, and banks axed dividends.
Following the worst quarter for global equities since 2008, Japan’s Nikkei 225 index tumbled 5.1 per cent, Hong Kong’s Hang Seng index dropped 2.7 per cent, and China’s Shanghai composite slipped 0.6 per cent.
Asian stocks were in particular dragged down by US President Donald Trump’s government warned that coronavirus could kill 250,000 Americans.
White House coronavirus coordinator Deborah Birx said hundreds of thousands would die even if Americans followed strict coronavirus restrictions. President Trump said the next two weeks would be “very, very painful.”
Japanese investors were bracing themselves on the first day of the new fiscal year for a global recession and a wave of corporate earnings and dividend cuts.
In a sign of the gloom over the country’s economy, The Bank of Japan’s “tankan” corporate survey showed the country’s manufacturers became pessimistic for the first time in seven years.
In Hong Kong, banking behemoth HSBC plunged 9.5 per cent after it bowed to pressure from UK regulators and suspended dividend payouts and promised not to buy back shares.
The decision will be particularly unpopular with retail investors, some of whom rely on dividend payments for their income.
Analysts at investment adviser BCA Research said it was downgrading its call on Chinese stocks from “overweight” to “neutral”.
Jing Sima, china strategist at BCA Research, said equities had not fallen enough in China to re-enter the market in uncertain times.
“Chinese stocks need to either offer a better price entry point, or a more upside potential in earnings outlook relative to their global peers.”