Markets around the region fell yesterday on concerns over a potential new wave of sovereign downgrades in Europe and uncertainty in Northeast Asia following the death of North Korean leader Kim Jong-il.
Turnover remained weak on the Hong Kong market, as in recent sessions, with investors increasingly choosing to watch from the sidelines in the run-up to the holiday season.
Stocks across Asia traded sharply down in the morning as regional markets absorbed the news of Kim's death and probability he would be succeeded by his twenty-something son, Kim Jong-un.
'There was some tense trading mid-session due to the North Korea situation, and the drop in the South Korean and Japanese markets impacted sentiment in Hong Kong,' AMTD Financial Planning general manager Kenny Tang Sing-hing said. 'But I think the Hong Kong market still has a positive view on China loosening monetary policy, so it performed a little bit better than the region.'
The Hang Seng Index fell as much as 2.5 per cent before the midday break, before regaining ground in the afternoon to finish down 215.18 points, or 1.18 per cent, at 18,070.21.
South Korea's Kospi index fell 3.4 per cent, the worst performance in the region, on concerns that Kim's death could further destabilise the isolated North and potentially lead to the collapse of the ruling regime. Japan's Nikkei 225 index fell 1.26 per cent to finish at 8,296.12. Markets on the mainland, North Korea's biggest political and economic supporter, dropped nearly 3 per cent at one point. But they recovered strongly in the afternoon on hopes that Beijing would introduce further fiscal stimuli to confront its slowing economy. The Shanghai A-share index closed down 0.3 per cent at 2,323.92, still not much higher than the three-year lows it touched last week.