‘Plunge’ of more than 2% in China in the shadow of Pelosi’s visit to Taiwan

Chinese shares fall more than 2%, Asian markets fall as geopolitical tensions rise over Pelosi visit

Stock markets in the Asia-Pacific region were in the red, with mainland China recording significant losses on Tuesday amid flaring geopolitical tensions over visit of the Speaker of the American House of Representatives Nancy Pelosi to Taiwan.

Local media reports citing unnamed sources said Pelosi will visit Taiwan. Beijing warned that its military “will not sit idly by” and will “defend China’s sovereignty and territorial integrity,” Foreign Ministry spokesman Zhao Lijian said Monday.

“Pelosi’s visit will significantly escalate tensions in US-China relations, but is unlikely to trigger a Chinese response that risks a confrontation,” Eurasia Group analysts noted in a note on Monday.

In this climate, in mainland China the Shanghai Composite loses 2.22% and Shenzhen falls 2.19%. Taiwan Semiconductor Manufacturing Company slipped 2.78%, while the broader Taiex lost 1.87%.

In the Hong Kong Hong Kong’s Hang Seng is down 2.25%, with heavyweights such as Alibaba and Meituan losing 2.23% and 2.56% respectively. The Hang Seng Tech index loses 3.05%.

In Japanthe Nikkei 225 index is down 1.47% and the Topix index is down 1.7%.

At South Korea, Kospi is at -0.73% and Kosdaq at -0.82%. It is noted that inflation in South Korea hit a 24-year high (at 6.3%) in Julyother evidence however suggests that the rate of price increases may be nearing a ceiling.

In Australia, the S&P/ASX 200 posted small gains. The Reserve Bank of Australia raised interest rates by 50 basis points after official data last week showed Australia’s consumer price index rose 6.1% in the second quarter compared to the same period last year.

THE broader MSCI index for Asia-Pacific shares outside Japan is down 1.54%.