HONG KONG (BLOOMBERG) - The global selloff in riskier assets deepened, spurring the biggest drop in Asian shares since 2011 and sending emerging-market currencies to the weakest levels on record.
Commodity prices sank to a 16-year low, while credit risk in Asia increased to the highest since March 2014. The yen rallied and government bonds rose as investors sought haven assets. China's Shanghai Composite Index tumbled 8.5 per cent, while US equity-index futures signaled a fifth straight day of losses.
The Straits Times Index was down 3.36 per cent to 2,871.07 as at 12:51 pm.
The Malaysian ringgit led Asian currencies lower, falling below 3 to the Singapore dollar for the first time ever. South African rand dropped more than 3 per cent.
"Things are probably going to get worse before they get better," said Nader Naeimi, head of dynamic asset allocation at AMP Capital Investors Ltd. in Sydney, which oversees about US$118 billion. "You really need rate cuts and more policy easing in China. In the meantime, things can get worse. We've got to see more clarity around the Fed."
More than US$5 trillion has been erased from the value of global stocks since China unexpectedly devalued the yuan, fueling speculation that the slowdown in the world's second- largest economy may be deeper than previously thought. The rout is shaking confidence that the global economy will be strong enough to withstand higher U.S. interest rates.
All major Asian markets were lower after US stocks capped their biggest two-day retreat in almost four years Friday. Futures on the Standard & Poor's 500 Index retreated as much as 3.1 per cent after the US benchmark plunged 5.2 per cent through the final two days of last week.
The MSCI Asia Pacific Index fell for a seventh straight day, sinking 4.3 per cent by 12:57 pm Tokyo time, set for its lowest close since June 26, 2013. The gauge is on the cusp of a 20 per cent slide from an April high.
Greater China equities plunged, with Taiwan's benchmark gauge dropping the most since 1990 and the Shanghai Composite falling as much as 8.5 per cent, close to the biggest intraday retreat since 2007.
Hong Kong's Hang Seng Index fell further into a bear market. The measure is about 25 per cent below an April high, with a gauge of price momentum falling to the lowest since the October 1987 stock-market crash.
The biggest five-day retreat for Japanese equities since the aftermath of the March 2011 earthquake, tsunami and nuclear disaster, saw the Topix index close morning trading more than 10 per cent below its recent peak. All 33 industry groups on the Topix dropped by at least 1.9 per cent on Monday.
South Korea's Kospi index slid 2.9 per cent, dragged lower by Samsung Electronics Co., which plunged as much as 6.2 per cent, the biggest drop since June 2013. Technology companies were the second-biggest drag on the Asia-Pacific gauge Monday.
The yen advanced with the euro as Treasuries rallied amid speculation the global selloff will forestall the Federal Reserve's first interest-rate increase since 2006. US notes due in a decade paid as little as 1.99 per cent, the lowest since April 29.
The Bloomberg Dollar Spot Index, which tracks the US currency against 10 of its most-traded peers, fell 0.2 per cent. The yen jumped 0.8 per cent to 121.07 per US dollar, the strongest since July 9. The euro advanced 0.6 per cent to US$1.1452.
Gold was little changed at US$1,159.30 after capping its biggest weekly advance since January.
Nasdaq 100 Index futures plunged 3.8 per cent, while contracts on the Dow Jones Industrial Average retreated as much as 3.1 per cent.
Before last week, US stocks had held their ground throughout 2015. The S&P 500 had stayed within a range roughly tracking its 50-, 100- and 200-day moving averages, boosted by signs the US economy is recovering and support from central banks. The benchmark index hadn't had a decline of more than 5 per cent all year.
The Bloomberg Commodity Index fell 1.4 per cent, heading for the lowest closing level since 1999. Brent crude slipped below US$45 a barrel for the first time since March 2009, while a barrel of US crude traded at US$39.48. Copper lost 2.5 per cent.
The rand plunged 3.5 per cent to lead commodity-producing nation currencies lower. The Australian dollar dropped 1.2 per cent and New Zealand's currency weakened 1.4 per cent.
Malaysia's ringgit slid 1.5 per cent to a fresh 17-year low, while Turkey's lira retreated 1.8 per cent.