Turkey crisis sends Asian stocks tumbling to one-year low

Weak economic data and bearish investors compound effects of Turkish financial crisis

Asian stocks fell to a one-year low on Wednesday, as investors in Chinese markets, already rattled by the Turkish financial crisis, turned more cautious.

Economic data published on Tuesday showed a slowdown in growth in several economic markers in China, and tech giant Tencent tumbled again ahead of releasing its earnings, bringing its total losses for the year to more than $150bn (£118bn).

“Investors tend to focus on negative aspects of listed companies’ first-half reports, as there is much pessimism and caution in a falling market,” said Linus Yip, a Hong Kong-based analyst at First Shanghai Securities.

Analysts also warned that simmering trade tensions between China and the US were a factor in market weakness.

Hong Kong’s Hang Seng index dropped 1.7 per cent to its lowest in a year, while the Shanghai Composite also plunged to a 12-month low.

Meanwhile, investor sentiment towards emerging markets remained downbeat due to weakness in the Turkish lira, with markets shifting towards the dollar, which is seen as a safe haven investment. The lira stabilised somewhat on Tuesday, but is still significantly weaker against the dollar, with $1 buying 6 lira.

Jameel Ahmad, global head of currency strategy at FXTM, said: “The relief rally that allowed emerging market currencies to regain their composure after a very nervous reaction from investors to the Turkish Lira crisis appears to have been temporary.”

In Europe, markets opened up, but most turned red in early trading, with the FTSE 100 dropping 0.4 per cent, while French and Italian markets stayed closed for a national holiday.

Investors are preparing for the latest inflation data, which is due to be published by the Bank of England on Tuesday morning.