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Asia Stocks Mostly Down, but Nikkei Ends Losing Streak--Update

17 Apr 2017 8:16 am

Stock markets across Asia ended mostly lower on Monday, as China's securities regulator urged tighter supervision of listed companies, while geopolitical tensions in Korea continued to discourage buying.

The Shanghai Composite Index ended down 0.7%, while Singapore's Straits Times Index was last off 0.9% and Taiwan Taiex ended down 0.2%. The Shenzhen Composite Index ended down 1.4%.

Markets in Australia, New Zealand and Hong Kong, as well as most European exchanges, were closed for Easter Monday.

In China, market sentiment worsened over an escalating regulatory crackdown on stock manipulation, despite stronger-than-expected economic data for the first quarter. Over the weekend China's top securities regulator, Liu Shiyu, urged stock exchanges to strengthen regulation and severely punish violations.

"Comments from Mr. Liu add psychological pressure on the market, which has been trading within a narrow range," said Shen Meng, director at Chanson & Co, an investment firm, "We are seeing a quick shift in market mechanism where speculation will face greater clampdown and yield smaller returns."

Blue chips in ship manufacturing, property and ports were among the biggest decliners, and many newly listed shares corrected sharply. More than 70 stocks fell by the 10% daily decline limit in Shanghai and Shenzhen. The China Securities Regulatory Commission said in a separate statement on Friday it will rein in speculation on new listings, which traders said triggered panic selling in those shares by some funds.

On Monday, China reported growth of 6.9% in the first quarter, its fastest pace since the third quarter of 2015, fueled by credit and infrastructure spending as well as a stubbornly booming property market. The pace was a notch up from the 6.8% expansion in the previous quarter and puts China well ahead of its annual target of about 6.5%.

Elsewhere in Asia, Japan's Nikkei Stock Average opened lower, but later recouped the declines to end up 0.1%, snapping a four-session losing streak. The fall was brought on by a stronger yen, which makes the nation's exports less competitive. Havens such as the yen and gold have risen along with geopolitical uncertainties in the region--with the yen on Monday rising to new five-month highs against the dollar and the euro.

Concerns of military conflict between the U.S. and North Korea grew over the past week. On Saturday, North Korea rolled a long-range ballistic missile, among other military equipment, through the streets of Pyongyang to commemorate the birth of the country's late founder, Kim Il Sung. The next day it unsuccessfully fired a ballistic missile, prompting a senior Trump administration official to warn that North Korea's provocative behavior couldn't continue--a warning underlined Monday by Vice President Mike Pence, who is visiting the region.

Still, stock selling appeared to be moderating as tensions failed to escalate to a direct military confrontation; Korea's Kospi closed up 0.5%, recovering from recent declines.

In Tokyo, one source of the recent stock declines--the unwinding of bullish bets built following November's U.S. presidential election--is easing, said Soichiro Monji, general manager of economic research at Daiwa SB Investments.

"The market will likely start to rebound" barring further escalation on the Korean Peninsula, he said.

For the rest of the week, investors will be watching U.S. trade relations with other Asian countries. Mr. Pence will be meeting his Japanese counterpart to discuss economic issues later this week.

Kosaku Narioka and

Yifan Xie

(END) Dow Jones Newswires

April 17, 2017 04:16 ET (08:16 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.
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