The plunge in the market is a normal reaction from investors who seek out safety amidst the uncertainty.
The Asian stock market is nosediving, closing the week mostly at a loss as a confluence of varying fundamentals is putting investors on edge. While American regulators have named at least five Chinese companies billed for delisting on American bourses, the response from investors has been a well-coordinated and spontaneous sell-off.
The Hang Seng Index (INDEXHANGSENG: HSI) shed 336.47 points atop a 1.61% loss to 20,553.79. Beyond Hong Kong, the losses engulfed the majority of Asian averages including the Nikkei 225 (INDEXNIKKEI: NI225) which slipped 2.05% to 25,162.78. TOPIX (INDEXTOPIX: TOPIX), which tracks all domestic companies of the exchange’s First Section, dropped 1.67% to 1,799.54.
The geopolitical war ongoing in Eastern Europe is billed to have a mildly damning ripple effect on the global economy with possible inflation across the board. Many governments, particularly those in Europe and the United States, are imposing broad-based sanctions on the Russian economy, particularly as it relates to oil products and banking-related services.
These are two key aspects of the Russian economy and the impact of the ban on oil products can have a massive impact on the global supply chain. Seeing the vital role crude oil plays in most country’s production activities, what this is eventually translating into is inflation.
In tandem with the encompassing losses, the South Korean Composite Stock Price Index or KOSPI (KRX: KOSPI) dropped 0.71% to 2,661.28 while Australia’s S&P/ASX 200 (INDEXASX: XJO) recorded a 0.94% plunge to 7,063.60.
The companies the US Securities and Exchange Commission (SEC) said it will delist include fast-food company Yum China Holdings Inc (NYSE: YUMC), tech firm ACM Research Inc (NASDAQ: ACMR), biotech group BeiGene Ltd (NASDAQ: BGNE), Zai Lab Ltd (NASDAQ: ZLAB) and pharmaceutical company Hutchmed Ltd (NASDAQ: HCM). All of these companies plunged by over 6% with ACM Research coming off as the worst loser with a 22.05% drop in value on Thursday.
Asian Stock Market Shows Reflection on American Averages
While the Asian stock market slipped down on Thursday and Friday, American averages did not fare any better.
The S&P 500 (INDEXSP: .INX) dropped 0.43% to 4,259.52, the Nasdaq Composite (INDEXNASDAQ: .IXIC) slipped 0.95% to 13,129.96, and the Dow Jones Industrial Average (INDEXDJX: .DJI) plunged 0.34% to 33,174.07.
The US is leading the countries imposing sanctions on Russia, and the government is gearing up for the proposed inflation that is billed to serve as one of the aftermaths of the ongoing war. In a bid to prevent Russia from evading sanctions meted out by the government, regulators have been redesigning regulations around the existing financial landscape to guard against this sanction evasion.
The plunge in the market is a normal reaction from investors who seek out safety amidst the uncertainty.
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