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(Bloomberg) -- Asian stocks outside of Japan declined in early trading, dragged down by losses in Hong Kong-listed Chinese technology shares as Donald Trump took an early lead in the US presidential election.
The MSCI Asia Pacific Excluding Japan Index slid almost 1%, with Alibaba Group Holding Ltd. and Meituan among the biggest drags on the benchmark. Although votes are still being counted, odds of a Trump win climbed in betting markets and on forecasting sites such as Decision Desk HQ.
The Hang Seng China Enterprises Index slumped about 3%, leading losses in Asia. The decline in Hong Kong equities — which are more closely linked to external events and global money flows — reflected international investors’ concerns about a second term for Trump, which may bring about heightened trade tensions and policy surprises. Stocks listed in mainland China fared relatively better amid expectations of more stimulus measures from policymakers.
In the latest signal of Beijing’s support for growth, China’s central bank chief pledged to maintain an accommodative monetary policy stance and to double down on countercyclical adjustments to bolster the economy. Investors are keenly tracking a key Chinese legislature meeting this week that may unveil ramped-up fiscal spending.
“Price action is clearly going to be volatile in Asia hours this morning as US election results trickle in,” said Chetan Seth, an Asia-Pacific equity strategist at Nomura Holdings Inc. “If the market sniffs a Trump victory, our sense is that a 2-3% move lower” in Chinese stocks by the end of the day is possible before some stabilization on expectations of likely stronger policy response from China, he added.
There are concerns among investors that another Trump presidency may keep inflation elevated and introduce high tariffs, complicating the Federal Reserve’s task to achieve price stability and boding ill for Asia’s export-driven economies. The MSCI Asia ex-Japan benchmark is up about 13% this year, trailing gains on Wall Street.
“Trump trades gaining ground in early Asian trading could be a mixed message for Asian equities,” said Charu Chanana, chief investment strategist at Saxo Markets. “While his pro-growth policies could spill over the tailwinds to Asia, threats of tariffs and a stronger dollar will have be to assessed as well.”
In Japan, stocks rallied after a stronger dollar weighed on the yen, which typically benefits the country’s export-oriented economy.
Sectors to Watch
Most cryptocurrency-related stocks in Asia follow Bitcoin higher as odds of Donald Trump winning the US election rise in betting markets after he won several states.
Shares of Guotai Junan and Haitong Securities rally after the Shanghai government approved the merger of the two companies.
Shares related to Asian defense companies, including shipbuilder Austal and Hanwha Aerospace Co., jump as the odds for Trump in the election are seen to improve in early vote counting.
Chinese aviation and aerospace shares advance for a second day after President Xi Jinping stresses the need to build a strong modern air force.
Markets at a Glance
MSCI Asia Pacific Index fell 0.4%
Japan’s Topix Index rose 2.1%; Japan’s Nikkei Index rose 2.6%
China’s CSI 300 Index was little changed; Hong Kong’s Hang Seng Index fell 2.4%; Hong Kong’s Hang Seng China Enterprises Index fell 2.5%
Taiwan’s Taiex Index rose 0.9%
South Korea’s Kospi Index fell 0.9%; South Korea’s Kospi 200 Index fell 0.7%
Australia’s S&P/ASX 200 Index rose 0.7%; New Zealand’s S&P/NZX 50 Gross Index was little changed
Singapore’s Straits Times Index was little changed; Malaysia’s KLCI Index rose 0.4%; Philippines’s PSEi Index fell 0.1%; Indonesia’s JCI Index was little changed; Thailand’s SET Index fell 0.2%; Vietnam’s VN Index rose 0.6%
10-year Treasury yield rose 17 basis points
Cboe Volatility Index fell 1.49 points
Bloomberg Dollar Index rose 1.4%
West Texas Intermediate crude fell 0.8% to $71 a barrel
Euro fell 1.6%
Here Are the Most Notable Movers
Shares of a Chinese company that sounds like “Trump wins big” to Mandarin speakers climb, while a stock that sounds like “Harris” falls as US election results start to roll in.
Mercari shares plunge as much as 16%, the most since March 2020, after the Japanese online marketplace reported first-quarter operating income that missed the average analyst estimate.
Nintendo shares rebounded Wednesday, despite the Japanese games maker cutting its operating profit guidance, as investors shifted their focus to the outlook for the Switch 2 console.
Mitsubishi Heavy shares fluctuated after gaining as much as 1.7% Wednesday morning. 2Q net sales beat the average analyst estimate, while the unchanged full-year guidance fell short of market expectation.
Related Market News
Taking Stock: Asian earnings forecasts are showing signs of deterioration, hurting sentiment further after regional stocks’ weekly decline hit its longest stretch since September 2022.
Global Wrap: Stocks extended gains, Treasury yields jumped and the dollar was on track for its biggest gain since March 2020 as early returns bolstered trades that have for months risen with Donald Trump’s election prospects.
This story was produced with the assistance of Bloomberg Automation.
--With assistance from Winnie Hsu and Abhishek Vishnoi.
