Asian markets plunged under the weight of a rising yen and uncertainty over the global impacts of the U.S. credit crunch in Monday's trading.
The Hang Seng was the day's biggest faller, shedding 1,117 points, or 3.88%, to 27,665. That's the index's first time closing below the 28,000 benchmark since October 1. The Shanghai Composite Index lost 127 points, or 2.4%, to 5,187, after Beijing
raised the reserve ratio requirement for banks on Saturday, and announced a lower-than-expected surplus.
The Nikkei dropped 386 points, or 2.48%, to 15,197, losing all of this year's gains and ending the day in negative territory for the year. In Korea, even the Kospi, which has been popular with value investors this fall, plummeted 67 points, or 3.37%, to 1,923.
"There are ongoing concerns about what's happening in the U.S. about credit concerns. Asian markets have gone up a hell of a lot, and it's good excuse for taking a bit of money out of the markets," says Peter Haimes, chief investment officer of Aberdeen Asset Management in Singapore. "When you look around markets have done spectacularly well, and pockets have got ahead of themselves. China has attracted a huge amount of interest and is probably overdue a correction."
In China, Beijing announced its October surplus was $27.05 billion vs. $23.91 in September, well below analyst expectations of $31 billion.
Monday's biggest fallers were consumer stocks and electronics exporters. In Hong Kong,
plummeted 8.62%, to HK$14.42, while rivals
dived 4.44%, to HK$20.45 and 7.6%, to HK$129.40, respectively.
China Life Insurance
slipped 4.28%, to HK$42.50, while Ping An tumbled 5.75%, to HK$87.60.
shares dipped 2.24%, to HK$28.35. Shares have dived 30% since the company debuted in an IPO on Nov. 5.
, which listed in Shanghai on the same day, sank 7.31%, to HK$14.96.
Property stocks were the most resilient to the Chinese bloodbath, with
Cheung Kong Holdings
losing just 0.7%, to HK$141.70,
Sun Hung Kai Properties
sliding 1.65%, to HK$11.90, and
one of the day's few gainers, up 1.19%, to HK$89.35.
In U.S. ETFs, some of that strength may be better news for the
iShares Hong Kong
, which is weighted nearly 25% across those three companies, than it will be for
iShares FTSE Xinhua
, which is invested over 28% across
China Life Insurance
Still, money managers were largely opportunistic about the correction in Chinese shares. Khiem Do, who manages $17 billion for Baring's Asia Pacific Fund in Hong Kong, says today's dips offer value to investors.
"Based on economic earnings growth, excess liquidity in the market and undervalued currencies and cheaper valuations in last 2 weeks as a result of the correction, this is a buying opportunity," says Do.
"Most stocks fell by the same amount over last few days so it doesn't matter what you buy -- there are a lot of sectors now
offering value," he adds.
Do says that consumer stocks and financials have both been over-punished by the correction and now look cheap to investors. That sentiment is broadly representative of many money managers in the region, who are using this expected decline to buy back many of the big blue chips.
In Korean trading,
ended unchanged, at 69,800 won, after clawing back from an intra-day low of 68,100 won, while steelmaker
didn't fare as well, losing 3.41%, to 566,000 won.
In Japan, exporters tumbled as the yen strengthened to another 52-week high vs. the dollar, to 110.62 at the close of Asian trading.
lost 3.6%, to 2,570 yen, while
fell 2.61%, to 5,210, and
dived 4.23%, to 58,800 yen. In financials,
lost 1.84%, to 903 yen, while
shed 2.44%, to 518,000 yen.
Aberdeen's Haimes says that the unwinding of the yen carry trade has to do with how funds are investing capital in the Asian region right now.
"People have been borrowing in yen and they have been investing it elsewhere. You have to look at what they are doing the other side of that trade," he says. "People are taking profits now on where they have invested it."
Haimes also adds that there are still areas of value in Asia that he expects to pick up over the longer term, such as in consumer stocks and electronics companies, which he says have lagged in the region due to the state of the U.S. economy.
"There is good value in these areas -- for us there are a number of stocks which just haven't performed at all this year," he adds.
Daniel M. Harrison is a business journalist specialising in European and emerging markets, in particular Asia. He has an MBA from BI, Norway and a blog at
. He lives in New York.