Mon, 06 Jul 2020

Kuala Lumpur sell-off undermines Asian stocks

Lola Evans
24 Feb 2020, 17:45 GMT+10

SYDNEY, Australia - Dramatic political events in Malaysia, and a widening of coronavirus cases and deaths beyond China put the skids on stocks in Asian markets on Monday.

The main index on the Kuala Lumpur exchange plunged to a 10-year low as Prime Minister Mahathir Mohamad signaled he is about to renege on his campaign promise of 2018 to step down and hand over power to Anwar Ibrahim. The 94-year old is believed to be plotting with other coalition members and people with Anwar's party to re-form the coalition government in a bid to exclude Anwar and grant Mahathir a new 5-year term. He had promised to step down in May this year.

The ructions on the stock market reverberated to the foreign exchange market where the ringgit dived to a six-month low.

On the coronavirus front, fears were mounting as the number of cases in South Korea rose to 763 with seven deaths recorded so far. In Iran, there are only forty three cases, however 8 people curiously have died.

In Italy 150 cases have been registered, and three deaths.

China's Shanghai Composite surprisingly only dropped 8.44 points or 0.28% to 3,031.23. Perhaps this was because the heat is now moving to other countries, whereas in China there are signs the virus has peaked.

The biggest fall in the Asia Pacific region was in Australia where the All ords tumbled 165.00 points or 2.28% to 28,706.54. The Aussie dollar too was being sold off sharply.

In Japan, the Nikkei 225 fell 92.46 points or 0.39% to 23,386.74.

The Hong Kong Hang Seng dived 487.93 points or 1.79% to 26,820.88.

The euro's recovery of Friday in New York couldn't be sustained in Asia on Monday. The EU currency fell back from 1.0850 to around 1.0813 late in the day in Sydney.

The British pound was a fraction weaker at 1.2940. The Japanese yen was little changed at 111.55. The Swiss franc fell to 0.9812.

The Canadian doll;ar weakened to 1.3280. The Australian dollar tumbled to 0.6595, while the New Zealand dollar eased to 0.6310.

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