Asian shares were a sea of red of Friday, take cues from a slump in U.S. stocks, which tanked overnight.
Losses were led by the Chinese markets, with Hong Kong’s Hang Seng Index down more than 3 percent and the Shanghai composite down more than 4 percent at midday after losing the most since February 2016, according to Reuters records.
The sell-off followed a robust rally in China’s stock market earlier this year, which is now unwinding ahead of the Lunar New Year holidays starting next week, as investors lock in profits, said Kevin Leung, global investment strategy director at Haitong international Securities.
The earlier gains were due to very persistent inflow into Asia emerging equities for “a long time”, particularly “large and euphoric inflows” driving valuations up, said Jonathan Garner, Morgan Stanley’s chief Asia and emerging equity strategist.
That looks to be unwinding now, said experts. And the selling may not let up as there is also technical pressure, said Daryl Liew, head of portfolio management at Reyl Singapore.
The “buy-on-dip strategy that worked so well last year” is probably one to avoid right now, Liew added to CNBC.
