Asian tech stocks plunge as sell-off that began on Wall Street proves contagious

HONG KONG – Internet and technology stocks tumbled across Asia on Monday as a sell-off spread from Wall Street where investors knocked down such companies over worries about excessively high valuations.

Mainstays of the Internet economy such as Google and Netflix that have surged over the past year were hammered on Friday as investors had a change of heart and decided prices were too high. The technology-heavy Nasdaq had its biggest one-day drop since February.

“Perhaps the key equity story now is the horrible price action in the momentum/growth stocks; especially ones that trade, or at least did trade, on outrageous valuations,” Chris Weston, chief strategist at IG Markets in Melbourne, wrote in a commentary.

The sell-off flowed to Asia, especially in Japan where the Nikkei 225 led regional declines, dropping 1.6 per cent to 14,818.08. Japanese Internet company Softbank Corp. slid 4.6 per cent. Yahoo Japan plunged 5.3 per cent and e-commerce firm Rakuten Inc. sank 5.2 per cent

South Korea’s Kospi slipped 0.3 per cent to 1,981.75 as Naver, which owns the Line messaging app, tumbled 6.2 per cent. NCsoft, developer of online games such as Lineage, lost 4.5 per cent.

Hong Kong’s Hang Seng was down 0.6 per cent to 22,376.43. Hong Kong-listed shares of China’s Tencent Holdings, which owns the smartphone-based instant messaging service WeChat, fell 4.4 per cent. Chinese software maker Kingsoft Corp. slid 5.3 per cent.

Australia’s S&P/ASX 200 shed 0.1 per cent to 5,415.20 while markets in mainland China were closed for a holiday.

Investors this week will be looking ahead to some key releases for further clues on the economic outlook. On Tuesday, they’ll be awaiting a policy statement from the Bank of Japan that may reveal whether the central bank will provide further stimulus. On Wednesday, they’ll be scrutinizing minutes from the Federal Reserve’s policy setting committee.

On Wall Street on Friday, the Nasdaq composite index plunged 2.6 per cent to close at 4,127.73. The S&P 500 index fell 1.3 per cent to 1,865.09 while the Dow dropped or 1 per cent to 16,412.71.

In currencies, the euro fell to $1.3698 from $1.3703 in late trading Friday. The Japanese yen slipped to 103.09 from 103.26.

In energy trading, benchmark U.S. crude for May delivery was down 26 cents to $100.88 in electronic trading on the New York Mercantile Exchange. The contract rose 85 cents to settle at $101.14 on Friday.