Asian stocks tumble as Chinese banking regulator warns of foreign ‘bubble’

Asian stocks tumble as Chinese banking regulator warns of foreign 'bubble'

Asia-Pacific stocks fell after China’s banking regulator worried about bubbles in foreign markets, a day after Wall Street posted its best performance in nearly nine months.

Hong Kong’s benchmark Hang Seng fell 1.6% on Tuesday, reversing initial gains, while China’s CSI 300 index of Shanghai and Shenzhen-listed stocks fell 2% and the S & P / Australian ASX 200 fell 0.4%.

Enthusiasm for US stocks also waned following comments from the Chinese regulator, with futures tipping the S&P 500 to fall 0.3% when trading on Wall Street opens. The FTSE 100 was expected to lose 0.2%.

“I am afraid that the bubble problem in foreign financial markets will someday arise,” Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, said at a briefing in Beijing. He underlined the gains on the American and European markets made possible by an ultra-flexible monetary policy, which, according to him, had “seriously diverged” from the real economy.

“The Chinese market is now closely linked to foreign markets and foreign capital continues to flow,” Guo said, according to the Chinese state-backed Securities Times, in a nod to the appetite of global investors for Chinese stocks and bonds. He added that if China could manage the scale and speed of the inflows, “we must prevent the volatility [China’s] domestic financial market to become too big ”.

Japanese Topix fell 0.4%, dampened by closing data who showed …

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