• The MSCI Asia Pacific Index has now fallen by more than 20% from its 2018 highs, thus falling into bear market territory.
• The ASX has lost 2% today to fall into a technical correction, while shares in Japan have been hardest hit in Asian trade.
• There wasn’t a specific catalyst for the overnight selloff, although some analysts pointed to weak Eurozone PMI data as a factor which weighed on sentiment.

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Asian stocks have entered a bear market, falling over 20% from the highs struck in late January this year.

The MSCI Asia Pacific Index — comprising large and mid cap representation across five Developed and nine Emerging Markets countries in the Asia Pacific region — has fallen 20.3% from the year-to-date high set on January 29.

Australia’s ASX 200 Index has fallen by around 2% in Thursday trade. At current levels, it’s now down more than 10% from its 2018 highs, entering a technical correction in the process.

The intra-day losses have been larger in key Asian markets, with South Korea’s KOSPI index down by around 2.1% in afternoon trade.

Japan’s TOPIX has been hardest hit, a short time ago down by around 2.5% with falls on the export-heavy index exacerbated by overnight strength in the Japanese yen, as capital flowed into safe-haven assets.

Chinese markets opened at 12:30pm AEDT and immediately slumped by more than 2.5% before rallying. China’s benchmark Shanghai Composite index currently sits down 1.42% at the mid-session break.

Those declines are reflected across the broader region on Thursday, as seen in the scoreboard below as at 2.45pm AEDT.

Australia ASX 200 5703.50 , -2.15%
NZ NZX 50 8572.62 , -0.81%
Japan TOPIX 1610.93 , -2.49%
Shanghai Comp 2566.21 , -1.42%
Shenzhen Comp 1270.29 , -2.08%
HK Hang Seng 24782.06 , -1.85%
Sth Korea KOSPI 2053.48 , -2.10%
Sinagpore STI 2999.41 , -1.08%
Taiwan TAIEX 9540.04 , -2.25%
Philippines PSI 6972.47 , -2.20%
Indonesia JKSE 5717.24 , 0.14%
Malaysia KLCI Index 1677.17 , -0.76%
Thailand SET 1601.74 , -1.33%
S&P 500 Futures 2673.75 , 0.36%

Only the Jakarta Stock Exchange in Indonesia, and S&P500 futures in the US, are trading higher at this point.

Today’s price action follows a sharp selloff on US markets overnight, as the S&P500 declined for the sixth straight session while the tech-focused NASDAQ index had its biggest daily fall since 2011.

A report from IHS Markit — revealing activity levels across the Eurozone’s private sector grew at the slowest pace since late 2016 in October — was cited by some analysts as possible factor behind the latest selloff.

“The pace of Eurozone economic growth slipped markedly lower in October, with the flash purchasing mangers index setting the scene for a disappointing end to the year,” said Chris Williamson, Chief Business Economist at IHS Markit.

“The survey is indicative of GDP growth waning to 0.3% in the fourth quarter, and forward-looking indicators, such as measures of future expectations and new business inflows, suggest further momentum could be lost in coming months.

“The survey will make for uncomfortable reading at the ECB.”

Others suggested that it was a confluence of existing factors that drove the latest selloff.

“If people are struggling to find a driver I suggest, they wake up and smell the coffee,” said Stephen Innes Head of APAC Trading at OANDA.

“The catalysts are nothing new — tariffs, Italy, Brexit, Saudi Arabia.”

“But the towering pillars of market strength, the US equity market, is looking ever so fragile and on the verge of crumbling.”

“The air is so thick with a sense of foreboding that you can cut it with a dull butter knife. Maybe there are too many things going sideways clouding investor judgement, but things could turn nasty in a heartbeat.”

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