Asian markets were mostly lower Wednesday after overnight losses on Wall Street. A global stock benchmark provider’s decision to add mainland China-listed shares to its widely followed stock indexes did little to boost risk appetite as the decision was widely expected. Oil prices fell.
KEEPING SCORE: Japan’s Nikkei 225 fell 0.2 percent to 20,183.90 and South Korea’s Kospi fell 0.6 percent to 2,355.66. Hong Kong’s Hang Seng index dropped 0.5 percent to 25,717.22. But China’s Shanghai Composite Index added 0.1 percent to 3,143.48. Australia’s S&P/ASX slumped 1.3 percent to 5,683.80. Stocks in Taiwan, Singapore and Southeast Asian markets were lower.
CHINA: Global stock benchmark provider MSCI decided to include 222 large Chinese companies in 2018 to its Emerging Markets index, which is closely followed by fund managers. The move could draw more foreign investment to Chinese firms but analysts said the decision was not a surprise to investors. South Korea’s government forecast little impact on Seoul financial markets. Adding Chinese shares to the MSCI Emerging Markets index will reduce South Korean shares in the index, which could trigger outflows of at most 4.3 trillion won ($3.8 billion) of foreign investment, it said. But that amount can be offset by the huge inflows of foreign investment to Seoul markets this year, according to South Korea’s Financial Services Commission.
ANALYST’S TAKE: ”Chinese authorities have been garnering for this positive decision and this recognition of the country’s efforts in opening up the financial market could really encourage more to be done that could lead to greater capital inflows,” Jingyi Pan, a market strategist at IG in Singapore, said in a daily commentary. But for markets in the region, ”the impact may be second-order and likely only be felt in the longer term. In the near-term, the inclusion could really been seen as symbolic at best.”
NORTH KOREA: Geopolitical tension was in focus as President Donald Trump tweeted that China’s efforts to pressure North Korea have not worked out. His tweet comes one day after learning that Otto Warmbier, an American student who was returned from North Korea to the U.S. in a coma last week, had died.
WALL STREET: Wall Street finished lower on Tuesday, retreating from record high levels. The Standard & Poor’s 500 index fell 0.7 percent to 2,437.03 and the Dow Jones industrial average lost 0.3 percent to 21,467.14. The Nasdaq composite dropped 0.8 percent to 6,188.03.
OIL: Benchmark U.S. crude lost 8 cents to $43.43 per barrel on electronic trading in New York Mercantile Exchange. The contract lost 92 cents to settle at $43.51 per barrel on Tuesday. Brent crude, the international standard, fell 11 cents to $45.91 per barrel. It dropped 89 cents to $46.02 per barrel on Tuesday.
CURRENCIES: The dollar weakened to 111.20 yen from 111.46 yen while the euro rose to $1.114 from $1.113.