Most Asian stocks drop as investors offload tech shares

Losses in tech spilled over into non-tech bourses as well, albeit at a smaller scale

Most Asian stocks dropped on Tuesday as investors offloaded technology shares.

Japanese markets were the worst performers for the day, declining sharply amid a growing sell-off in long-dated government bonds on concerns over how Prime Minister Sanae Takaichi will fund her expansionary fiscal policies.

A continued diplomatic rift between Tokyo and Beijing also rattled Japanese stocks.

Nikkei 225 and TOPIX indexes slipped more than 3% and 2%, respectively.

Japanese markets were spooked by longer-term Japanese government bond yields surging to multi-decade highs, amid a growing rout in bond prices.

Japan’s 30-year government bond yields soared 1.8% and were close to record highs, while the 20-year bond yield climbed 1.4% to a record high.

Selling in the bond market came as Takaichi’s administration prepares to release its first ever spending package, which could be revealed as soon as this week.

Data showing a sharp third-quarter contraction in the Japanese economy fuelled bets that Takaichi will dole out even more spending to support the economy. Media reports showed that Takaichi was also considering tax cuts to boost private spending.

Higher yields make it more difficult for governments to issue debt, while higher bond selling by investors signals fading faith in government debt.

A persistent diplomatic rift between Tokyo and Beijing, over Takaichi’s comments on military action in Taiwan, also rattled Japanese markets.

Film and animation stocks, including giants Toei Co Ltd and Toho Co., Ltd. dropped sharply on Tuesday following reports that China had blocked the release of some upcoming Japanese movies.

Tech-heavy Asian bourses clocked steep losses on Tuesday, with KOSPI down 3.3%, while Hong Kong’s Hang Seng slid 1.9%.

Losses in tech also pressured Japanese markets, with conglomerate SoftBank Group Corp. down almost 6%.

In South Korea, chipmakers Samsung Electronics Co Ltd and SK Hynix Inc dropped 1.5% and 4%, respectively, while in Hong Kong, Xiaomi Corp she more than 3% before its third-quarter earnings.

Losses in tech spilled over into non-tech bourses as well, albeit at a smaller scale. Shanghai Shenzhen CSI 300 and Shanghai Composite indexes, which have a relatively smaller weightage of tech stocks, dropped 0.2% and 0.6%, respectively.

ASX 200 slipped 2.2%, hit by losses in heavyweight banks and mining stocks after the minutes of the Reserve Bank of Australia’s November meeting showed the central bank remaining largely cautious over cutting interest rates further.