Dollar Weakness Crimps Asian Markets -- 2nd Update

By FeaturesDow Jones Newswires

Major Asian stock markets gave up early gains Monday as the U.S. dollar pulled back from morning highs.

The turnaround in parts of the region was led by shares in China and Hong Kong. They headed lower in midday trading, with the mainland decline led by small-cap companies listed in the country's south amid a regulator's comments about clamping down on high-priced stocks.

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"The market had been bracing for a near-term correction for a while," said Kevin Leung, director of global investment strategy at Haitong International Securities Group in Hong Kong.

The Shanghai Composite Index--which had risen in 19 of the past 21 trading days, hitting two-year highs--was recently down 0.9%; the Shenzhen Composite Index was 1.6% lower.

Mr. Leung added that regulatory caution regarding "mainland investors dumping money into Hong Kong" and the looming expiration of some equities futures contracts likely provided reasons to sell.

The Hang Seng Index had risen in 24 of the past 27 trading days, setting a series of record highs in the process. The Hong Kong benchmark index was recently down 0.6%.

Chinese investors recently poured a net 6 billion yuan ($950 million) into the city's stock market over four consecutive days, said Ivan Ip, a stock strategist at UOB Kay Hian, with most of it flowing into Hong Kong-listed stocks of China's large banks.

The country's two biggest lenders by assets, Industrial & Commercial Bank of China and China Construction Bank, hit fresh record highs Monday morning before losing gains of up to 5%. Their shares have surged 17% and 25%, respectively, so far this year.

Japanese stocks suffered their own decline after the midday break, with the Nikkei finishing flat. The move came as the WSJ Dollar Index's gains shrank to 0.1% and as the greenback fell to Yen108.75 from just below Yen109 earlier and Yen109.37 at Friday's local stock-market close.

Last week, the dollar slid to a series of three-year lows, following comments from Treasury Secretary Steven Mnuchin that were interpreted as being accepting of a weaker dollar. The WSJ Dollar Index had fallen for seven straight weeks, the longest run since 2010.

Meanwhile, indexes in South Korea and India hit fresh intraday records on Monday, with both rising about 1%. The latter followed a three-day holiday weekend and Korea was boosted by more than 3% gains in the securities and construction sectors.

The Kospi is up 5.5% this month and it could gain a further 3% by the end of February as concerns about the tech sector's resilience and policy changes by the government recede, said S.K. Kim, an analyst at Daiwa Capital in Seoul.

In Southeast Asia, benchmarks in Singapore and Malaysia climbed about 0.5% each, looking to notch multiyear closing highs.

Among individual stocks, Hong Kong-listed Wynn Macau fell 6%, cutting the month's gain to 14%, after The Wall Street Journal reported over the weekend that employees at parent Wynn Resorts and others interviewed alleged that the CEO sexualized the workplace and pressured workers to perform sex acts.

Las Vegas mogul Steve Wynn responded: "The idea that I ever assaulted any woman is preposterous." Wynn Resorts shares slumped 10% Friday in the U.S.

In commodities, U.S. oil futures rose 0.3% in Asian trading, hitting fresh three-year highs,

Write to Kenan Machado at kenan.machado@wsj.com

(END) Dow Jones Newswires

January 29, 2018 01:56 ET (06:56 GMT)

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