In the markets of China, Argentina, Japan, Europe and Africa the worst losses were recorded this week as investors withdrew ‘risky’ assets
Wall Street closed this week with the steepest decline since 2016, in a fall that has dragged on since Friday after better-than-expected US employment data fueled fears of a rise in inflation.
During the week, the Dow Jones and S & P 500 accumulated a loss of more than 5%, after rebounding to record highs in January. However, Wall Street was not the stock market with the worst results.
According to CNBC, the markets of China, Argentina, Japan, Europe, and Africa have registered deeper losses. With this, it is reflected that investors from all over the world are withdrawing from ‘risky’ assets, from emerging markets.
“Historically, stocks in emerging markets always fall when the US stock market experiences a correction, even when the cause of correction has little or nothing to do with emerging markets,” said Oliver Jones, an economist at Capital Economics.
While the Shanghai stock market fell 14.6% after touching a two-year high at the end of January, the Hang Seng Index – the main index of the Hong Kong Stock Exchange – lost 13% during the week.
“This has been the most overbought situation since the financial crisis 10 years ago,” said Niklas Hageback, founder of the Hong Kong hedge fund Valkyria Kapital to CNBC.
As he explained, it was foreseeable that there would be a correction in the short term, since the US market began to show weakness, “the fall has been extensive, especially for financial and property values of the mainland,” he said.
Francois Perrin, portfolio manager at East Capital, commented that it is a good time to buy shares at cheap prices, because “they still represent an attractive investment case”.
Argentine financial markets closed on Friday still affected by hedging in dollars before a marked aversion to global risk.
The Merval index of the Buenos Aires Stock Exchange ended this Friday with a fall of 2.77%, after recording a historical maximum value at the beginning of February. Since February 1, it has lost 16% of its value.
According to Edward Glossop of Capital Economics, a fall after a long-term rally was expected; however, this was deepened by concerns related to the recent Central Bank policy on inflation.
Like other global markets, the Nikkei index was affected by the turbulence of Wall Street, in one of its worst weeks since two years ago.
The Nikkei 225 index of the Tokyo Stock Exchange lost 2.32% at the end of today’s session, with 21,382.62 points.
This fall occurs after reaching its highest levels at the end of January since 1990s; since then it has lost 12.6% of its value.
European stock markets closed the week with moderate losses; however, some markets such as Germany had important results.
This Friday, the selective index DAX 30 of the stock exchange of Frankfurt closed with a descent of 1.25%. Thus, it has accumulated a loss of 11.7% since reaching its historic high at the end of January.
In the same vein, the Stockholm 30 lost 11.5% since its last earnings peak in November 2017.
In South Africa, the FTSE JSE All-Share index in Johannesburg fell to 11% since it hit an all-time high at the end of January.
“Even though the epicenter of mass selling seemed to be development in the United States, it is not surprising that South African stocks have also been very affected,” said Oliver Jones, an economist at Capital Economics.