Asian stocks fall on Paris strikes

A Pakistani stockbroker watching share prices during trading at the Karachi Stock Exchange on Nov 16, 2015.
A Pakistani stockbroker watching share prices during trading at the Karachi Stock Exchange on Nov 16, 2015.PHOTO: AFP

But analysts expect overall economic impact of terror attacks to be limited

SYDNEY • Asian stocks yesterday dropped towards their lowest levels in six weeks after Europe's worst terror attacks in a decade and as data showed Japan's economy had fallen back into recession. But the overall economic impact of last Friday's terror attacks in Paris was assessed to be limited.

The MSCI Asia Pacific Index declined 1.2 per cent to 130.59 in late Asian trading, as every industry group retreated.

Japan's Topix index lost 0.9 per cent as data showed weakness in the country's business investment and shrinking inventories drove the economy's contraction.

In Singapore, the benchmark Straits Times Index ended down 9.95 points, or 0.34 per cent, at 2,915.73, after a slow day that saw only 1.19 billion shares worth $855.7 million transacted.

Investors are assessing the impact of the Paris attacks on Europe's economy at a time when global output is already weakening and an equity rally is showing signs of stagnating.

"There is no doubt that the attacks in Paris will contribute to short-term investor nervousness," said Mr Shane Oliver, Sydney-based strategist at AMP Capital Investors.

Stock markets in the past decade have rebounded from terror attacks after an initial negative impact, as it becomes clear there will not be a major economic impact, he said. "I think history will repeat itself. It will just be a short sell-off," Mr Oliver said.

In early European trading, shares reversed early losses with no long-term economic impact seen from the attacks in France.

The history of terror incidents around the world over the past 15 years shows market reactions are often sharp and, increasingly, short-lived.

In Paris, the benchmark CAC 40 index of top French companies dived 1.1 per cent in opening deals, and remained slightly in the red in early trade.

"The tragic events limited any risk appetite and caused nervous trading conditions," said Sucden analyst Myrto Sokou.

The history of terror incidents around the world over the past 15 years shows market reactions are often sharp and, increasingly, short-lived.

While the Standard & Poor's 500 Index slumped 12 per cent in five days after the Sept 11, 2001, attacks in the United States, the benchmark equity gauge recovered losses within a month.

"You're seeing a knee-jerk reaction," Mr Vasu Menon, vice-president of wealth management at OCBC in Singapore, told Bloomberg TV. "But I do not see a lasting significant impact on market sentiment."

Japan's economy contracted in the third quarter on sluggish business investment.

Gross domestic product declined an annualised 0.8 per cent in the three months ended Sept 30, following a revised 0.7 per cent drop in the second quarter, official data showed yesterday.

Economists had estimated a 0.2 per cent decline for the third quarter.

South Korea's Kospi index retreated 1.5 per cent and Hong Kong's Hang Seng Index dropped 1.7 per cent.

BLOOMBERG, REUTERS

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STI down on concern over Paris attacks

A version of this article appeared in the print edition of The Straits Times on November 17, 2015, with the headline 'Asian stocks fall on Paris strikes'. Print Edition | Subscribe