Hong Kong’s Hang Seng Index and the MSCI Asia ex-Japan Index fell sharply on Wednesday as early US election results showed Donald Trump taking an initial lead.
The Hang Seng Index slumped by over 3%, with major Chinese tech stocks like Alibaba Group and Meituan pulling down the benchmark.
Meanwhile, Japan’s Nikkei 225 gained on a weaker yen, which is seen as beneficial for Japan’s export-driven economy.
Hong Kong’s Hang Seng Index sinks on US election concerns
The Hang Seng Index led declines across Asian markets, falling more than 3% as Trump’s early election lead raised fears of renewed trade tensions with China.
Hong Kong’s tech-heavy market, closely linked to global investor sentiment, saw notable drops as worries mounted about the potential impact of Trump’s foreign policy on Chinese companies.
Major Chinese firms, including Alibaba and Meituan, were among the biggest drags on the index, reflecting investor unease about the possibility of more US-China policy shifts.
“Price action is clearly going to be volatile in Asia hours this morning as US election results trickle in,” said Chetan Seth, Asia-Pacific equity strategist at Nomura Holdings Inc.
If Trump appears to be winning, a 2-3% move lower in Chinese stocks by the end of the day is likely before some stabilization on expectations of stronger policy response from China.
MSCI Asia ex-Japan Index drops amid regional volatility
Outside of Japan, the MSCI Asia Pacific Excluding Japan Index slipped almost 1%, weighed down by losses in Chinese technology shares.
The Index, which includes key Asian markets outside Japan, felt the pressure of global investor uncertainty, with Trump’s election prospects casting a shadow over regional equities.
Investors are worried that a second Trump term could reinstate trade tensions, complicating the outlook for Asia’s export-focused economies.
Nikkei 225 gains on yen’s drop, lifting Japanese exporters
The Nikkei 225 diverged from its regional counterparts, showing a positive response to the dollar’s strength, which lowered the yen’s value against major currencies.
A weaker yen typically benefits Japan’s export-heavy economy, making Japanese goods more competitive internationally.
Export-driven sectors in Japan, such as automotive and electronics, showed gains, helping the Nikkei 225 maintain its upward momentum amid wider regional declines.
Chinese stimulus hopes stabilize mainland stocks
While Hong Kong’s Hang Seng and the MSCI Asia ex-Japan Index struggled, mainland Chinese stocks fared relatively better as investors hoped for additional stimulus measures.
Beijing’s central bank has indicated its commitment to an accommodative monetary stance, and investors are eyeing a legislative meeting where further fiscal support measures could be announced.
These hopes helped offset some of the election-driven volatility affecting Chinese markets.
Crypto and defense stocks gain as Trump prospects rise
Defense and crypto-related stocks in Asia gained ground as Trump’s early election lead brought renewed enthusiasm for sectors seen as likely to benefit from his policies.
Bitcoin, in particular, surged above $75,000, reflecting the cryptocurrency market’s alignment with Trump’s favorability among crypto proponents.
Defense stocks, buoyed by the prospect of pro-defense policies under a Trump administration, also saw upticks.
Regional markets brace for volatile election impact
As the US election results continue to emerge, Asian markets are bracing for a volatile trading period.
The Hang Seng and MSCI Asia ex-Japan indices are particularly vulnerable to shifts in US policy, while Japan’s Nikkei 225 may continue to benefit from a weaker yen.
Meanwhile, mainland Chinese stocks remain hopeful for additional stimulus measures to stabilize the economy.
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