Markets also 'nervous' over Pelosi's Taiwan visit... Asian stock markets fall together

Nancy Pelosi, Speaker of the U.S. House of Representatives [Photo by Reuters]

[Asia Economy Reporter Jeong Hyunjin] As tensions between the U.S. and China escalated ahead of U.S. House Speaker Nancy Pelosi's visit to Taiwan, Asian stock markets collectively declined on the 2nd.

According to Bloomberg News, on that day, Japan's Tokyo Stock Exchange Nikkei 225 index closed at 27,594.73, down 1.42% from the previous trading day. The TOPIX index ended trading at 1,925.49, down 1.77%. South Korea's KOSPI and KOSDAQ indices also fell by 0.52% and 0.40%, respectively.

China's Shanghai Composite Index closed at 3,186.27, down 2.26% from the previous day. The Shenzhen Component Index dropped 2.37% to 12,120.02, and the ChiNext, known as the "China Nasdaq," closed at 2,678.62, down 2.02%. Hong Kong's Hang Seng Index and Taiwan's stock market also experienced declines exceeding 2%, with the stock price of TSMC, Taiwan's leading stock and the world's largest semiconductor foundry company, falling more than 2%.

Investors flocked to safe-haven assets instead. In Tokyo trading, the yield on the U.S. 10-year Treasury note approached 2.5%, marking its lowest level in over four months since April 5. U.S. Treasuries are a representative safe asset, and a decline in bond yields indicates a rise in prices. The Japanese yen, another safe-haven asset, strengthened to 130.40 yen per dollar during the session, reaching its highest level in two months. The Taiwan dollar hit its lowest level since May 2020. Spot gold prices also rose to $1,790.53 per ounce, the highest in the past month.

Bloomberg pointed out that Pelosi's visit to Taiwan has become a new pressure point for investors already struggling with the U.S. economic recession, major countries' interest rate hikes, and soaring inflation. Alvin Tan, head of Asia currency strategy at RBC Capital, said, "An economic response to Taiwan is inevitable," adding that it is necessary to monitor China's future reactions.

Speaker Pelosi, who is touring Asia, is expected to arrive in Taiwan on the night of the 2nd. In response, China has strongly opposed the visit, warning that it would not hesitate to take military action. Zhao Lijian, spokesperson for the Chinese Ministry of Foreign Affairs, stated at a regular briefing the previous day, "If Speaker Pelosi goes to Taiwan, it would be a blatant interference in China's internal affairs," and warned, "The Chinese People's Liberation Army will never stand idly by and watch (Pelosi's visit to Taiwan)."

This content was produced with the assistance of AI translation services.