HONG KONG (MarketWatch) — Mainland Chinese shares tumbled on Tuesday to lead most major Asian markets down as investors disappointed by a lack of monetary policy easing sold down stocks across the board.
Australian shares skidded lower after the central bank there surprised markets by leaving its policy rate unchanged against widespread expectations of a reduction, while Japanese stocks were pressured by some weak earnings reports.
China’s Shanghai Composite (SHE:CN:000001) dropped 1.7% to 2,291.90 and Japan’s Nikkei Stock Average (NIKKEI:JP:NIK) slipped 0.1% to 8,917.52.
“There are expectations of an interest cut in China and yet nothing is coming at the moment,” Tom Kaan, director of equity sales at Louis Capital Markets in Hong Kong said. “It’s very difficult to read the official line, and that is what is putting people off trading mainland China stocks.” Read report on possibly hawkish signal from China’s central bank.
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The S&P/ASX 200 index (S&P:AU:XJO) erased early gains to finish 0.5% lower at 4,274.2 in Sydney after the Reserve Bank of Australia left its policy rate unchanged at 4.25%, while Hong Kong’s Hang Seng Index (HONG:HK:HSI) fell 0.1% to 20,699.19.
Bucking the broad trend, South Korea’s Kospi (KOREA:KR:180721) rose 0.4% to 1,981.59 and Taiwan’s Taiex added 0.3% to 7,707.44.
Tight liquidity conditions and the absence of a reduction in bank reserve requirement ratio pressured stocks on mainland bourses.
Air China Ltd. (OTC:AIRYY) (SHG:CN:601111) , down 4.1%, Anhui Conch Cement Ltd. (SHG:CN:600585) , 3.2% lower and Harbin Pharmaceutical Group Co. (SHG:CN:600664) , off 3.1%, were among the notable decliners in Shanghai, where losses where widespread.
In Hong Kong, Chinese property, coal mining and banking stocks lost ground, with Agile Property Holdings Ltd. (HKG:HK:3383) (OTC:AGPYY) slumping 4.7%, China Coal Energy Co. (OTC:CCOZY) (HKG:HK:1898) down 2% and Bank of China Ltd. (HKG:HK:3988) (OTC:BACHY) falling 1.2%.
In Sydney, miners were among those hurt after the RBA’s decision to remain steady on interest rates, with Rio Tinto Ltd. (ASX:AU:RIO) (NYS:RIO) down 1.8% and Fortescue Metals Group Ltd. (ASX:AU:FMG) down 1.9%.
Shares of National Australia Bank Ltd. (ASX:AU:NAB) (OTC:NABZY) sank 4% and investment bank Macquarie Group Ltd. (ASX:AU:MQG) (OTC:MQBKY) gave up 0.8% after issuing updates that fell short of expectations.
National Australia Bank missed analysts expectations with a 7.7% rise in first-quarter cash earnings, and also said it will undertake a strategic review of its U.K. operations given difficult operating conditions faced by the unit. Macquarie shares dropped after the firm forecast a worse-than-expected 25% fall in full-year profit due to tough trading conditions.
Hearing loss device maker Cochlear Ltd. (ASX:AU:COH) (OTC:CHEOY) outperformed, with shares surging 7.6%. The firm delivered a first-half loss of A$20.4 million ($21.87 million), hit by provision costs relating to a recall.
Sentiment in Asia was also bruised by a lack of resolution in Greek debt talks.
Concerns that Greece may be at a rising risk of a messy default drained investor confidence and pushed U.S. markets lower on Monday. Greek political leaders have yet to agree on austerity measures required to secure the next round of bailout funds, with reports saying negotiations will resume Tuesday. Read more about Greek debt negotiations.
“Markets have been hit a little by the Greek bailout negotiations,” said Naomi Fink, equity strategist at Jefferies Japan. “A lot of the recent rally has been on hopes of better overseas demand.”
In Tokyo, earnings reports pressured some firms. Suzuki Motor Corp. (TKS:JP:7269) (OTC:SZKMY) lost 1.8% after posting a profit slide of just under 5% during the April-December period.
Also hit by earnings related news, Dainippon Screen Manufacturing Co. (TKS:JP:7735) shed 7.1%.
Shipping stocks rose to support the broader market after last year’s hefty losses. Mitsui O.S.K. Lines Ltd. (TKS:JP:9104) (OTC:MSLOF) rose 2.2% and Nippon Yusen K.K. (TKS:JP:9101) (OTC:NYUKF) added 2.4%.
Nippon Telegraph & Telephone Corp. (TKS:JP:9432) inched up 0.1%, finding buyers after recent losses, despite posting a 56% quarterly profit decline.
In Seoul, shares of Samsung Electronics Co. (OTC:SSNLF) added 1.8% and Hyundai Heavy Industries Co. (OTC:HYHZF) climbed 0.7% on foreign buying interest to support the broader market.