Markets in Japan and China sank sharply on Tuesday as tensions between the two countries escalated, adding fuel to an already fierce global sell-off.
Tokyo’s Nikkei closed down 3.2pc at 48,702.98, while the Shanghai Composite slipped 0.8pc. In Hong Kong, the Hang Seng Index fell 1.7pc, with the city’s tech gauge sliding 1.9pc.
While both markets were swept up in the worldwide retreat driven by anxiety over stretched tech valuations and concerns about the US economy, they were also weighed down by a rapidly worsening diplomatic clash over Taiwan.
Japan has urged its citizens in China to heighten safety precautions and avoid crowded areas after Prime Minister Sanae Takaichi warned that a Chinese attack on Taiwan could trigger a military response. In an effort to cool tensions, a senior Japanese foreign ministry official has travelled to Beijing for talks with his Chinese counterpart.
Beijing has responded by advising Chinese citizens not to travel to Japan — a move that threatens a major economic blow, with Chinese tourists accounting for nearly a quarter of all visitors to the country, according to official data. Tourism-linked shares in Japan tumbled on the news.
