Most Asian shares fell on Monday amid renewed geopolitical tensions in the Middle East following reports of U.S.-Iranian airstrikes and Tehran’s closure of the critical Strait of Hormuz.
The United States (US) and Iran carried out airstrikes over the weekend, and Tehran targeted US facilities in many Persian Gulf countries and announced the closure of the Strait of Hormuz. The U.S. military said in a social media post that the attacks were intended to limit Iran’s ability to attack civilian ships in the Strait of Hormuz, adding that U.S. President Donald Trump “ordered the attacks to hold Iranian forces accountable.”
Shares on South Korea’s KOSPI stock exchange fell more than 7.95% to 6,880 as heavyweight chipmakers faced renewed pressure. Shares of Samsung Electronics fell almost 7% and SK Hynix fell 11%.
Meanwhile, the Nikkei 225, Japan’s benchmark, fell 2.20% to 67,040. Japanese Finance Minister Satsuki Katayama said on Friday that the government was implementing measures that would include the Government Pension Investment Fund (GPIF) to make “significantly greater investments in Japanese financial assets.”
Stock exchanges in China and Hong Kong are losing momentum on Monday, with the main stock index in SHANGHAI falling by 1.70% to 3,930. The stock exchange in Hong Kong rose by 0.1% to 24.2 thousand.
India’s Nifty50 index fell 0.27% to 24,141 on Monday. In Taiwan, the Taiex rose 0.39% to 45,540. In other Southeast Asian markets, quotations are falling.
Asian Shares FAQs
Asia accounts for approximately 70% of global economic growth and hosts several key stock indices. Among the developed economies of the region, the Japanese Nikkei – representing 225 companies on the Tokyo Stock Exchange – and the South Korean Kospi stand out. China has three crucial indices: the Hong Kong Hang Seng, the Shanghai Composite and the Shenzhen Composite. Indian stocks, as a vast emerging economy, are also attracting the attention of investors who are increasingly investing in companies listed in the Sensex and Nifty indices.
Asia’s major economies are different, and each has specific sectors to pay attention to. Technology companies dominate indexes in Japan, South Korea and, increasingly, China. Financial services leading equity markets such as Hong Kong and Singapore are considered key hubs for the sector. Manufacturing is also vast in China and Japan, with a particular focus on car and electronics production. A growing middle class in countries like China and India is also giving increasing importance to retail and e-commerce companies.
Asian stock indices are influenced by many different factors, but the main driver of their performance is the aggregate performance of their constituent companies, as disclosed in their quarterly and annual earnings reports. Each country’s economic fundamentals, as well as the decisions of its central bank or government fiscal policy, are also crucial factors. More broadly, political stability, technological progress or the rule of law may also affect stock markets. The results of American stock indices are also crucial, because Asian markets most often take over from Wall Street shares from one day to the next. Finally, broader risk attitudes in markets also play a role, as stocks are considered a risky investment compared to other investment options such as fixed income securities.
Investing in stocks is risky in itself, but investing in Asian stocks has region-specific risks that need to be taken into account. Asian countries have a wide range of political systems, from full democracies to dictatorships, so their requirements for political stability, transparency, rule of law or corporate governance can vary significantly. Geopolitical events such as trade disputes or territorial conflicts, as well as natural disasters, can lead to volatility in stock markets. Moreover, currency fluctuations may also impact the valuation of Asian stock markets. This is especially true in export-oriented economies, which tend to suffer from a stronger currency and benefit from a weaker one when their products become cheaper abroad.
