Asian markets continued to be pummeled on January 5 as investors panicked on reports that North Korea has conducted a nuclear test. This ominous news are stacked after the confirmed Chinese economy slowdown. The Chinese markets, however, went against the trend and finished markedly higher.
International markets fall
Major markets dropped sharply, with Kospi plunging 0.26 percent or 5.10 points to floor at 1,925.43. There was a182.68 points loss at the Nikkei 225, or about 0.99 percent, to trough out art 18,191.32. The ASX 200 also spilled blood through a 1.18 percent dip, or a loss of 61.3 points to settle at 5,123.13.
The dark outlook soon spilled over to Europe, foretelling a marked lower open for Germany’s DAX, France’s CAC and Britain’s FTSE. The lower sentiment towards assets considered riskier pushed up safe havens like US Treasuries and the Japanese Yen. According to Angus Nicholson of Spreadbetter IG, fears concerning China have once again dominated the Asian markets on January 5. The nuclear test conducted by Korea added Armageddon fears to the mix.
The emerging equity index of the MSCI dropped 0.6 percent, reaching a six and half year low. The broadest Asia Pacific shares index of MSCI outside Japan plunged one percent after yuan’s midpoint rate was set by People’s Bank of China. It reached its weakest level in four and half years. The result was a rapid fall of offshore yuan-which has already hit its lowest from October 2010. This dragged down a number of emerging currencies like Thai baht and Malaysian ringgit.
North Korea and Chinese stocks
There were reports of a North Korean 5.1 magnitude earthquake near the country’s known nuclear testing site. The state own television in North Korea later informed that the nation has conducted a hydrogen nuclear test. It also said that the launch was successful. It also warned that it will not surrender any nuclear capability unless the US changes its hostile attitude. Yonhap news agency of South Korea said that North Korea did not advance notice of any nuclear tests.
The Shanghai Composite shrugged off any lingering concerns linked to Chinese economic data, and went up to rest at 74.58 points. This is a rise of 2.27 percent, reaching the 3,362.28 and the Shenzhen Composite pushed up by 54.18 points, or 2.605 percent. The final figure is 2,133.96. The weakness of the yuan, and renewed volatility of stocks have placed China squarely at global risks forefront.