Asian shares inch lower as dollar marches on

Asian shares wobbled lower on Thursday, hurt by the US dollar which continued to march higher as investors bet on interest rates rising more quickly in the United States than in other major economies such as Japan and the euro zone.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 0.18 per cent to a six-week low, having posted a small decline in each of the past six trading sessions. Japan’s Nikkei (.N225) rose 0.8 per cent. There were mild declines across the board. Australia (.AXJO) shed 0.1 per cent, Hong Kong (.HSI) lost 0.35 per cent, and Chinese blue chips (.CSI300) shed 0.3 per cent.

Notably in Hong Kong, shares of Kaisa Group Holdings Ltd’s (1638.HK) rose as much as 24 per cent on their return to trading, after the embattled Chinese developer said it was offering bondholders an option to exchange existing bonds with new bonds having an extended maturity, to improve financial stability.

In broad terms, “when it comes to regional equities allocation, we’re watching the US dollar which is making new highs and that is a headwind for emerging market equities,” said Fook-Hien Yap, senior investment strategist at Standard Chartered Bank wealth management.

The dollar is trading near its highest in almost five years versus the Japanese currency at 115.3 yen, and nearly 18 months to the euro which was at $1.1206.

Supporting the greenback, several US Federal Reserve policymakers said they would be open to speeding up the tapering of the central bank’s bond-buying programme.