By V. Phani Kumar, Shri Navaratnam and Philip Vahn
HONG KONG (MarketWatch) -- Asian equities stretched their losing run Friday after a massive wave of selling hit Wall Street overnight, though Hong Kong and Taiwanese markets pared early losses. European sovereign debt troubles remained in focus.
Japan's Nikkei 225 Average finished 3.1% lower after dropping more than 4% at one point. Australia's S&P/ASX 200 gave up 2%, China's Shanghai Composite slid 1.9%, Hong Kong's Hang Seng declined 1.1%, Taiwan's Taiex ended down 0.2% and New Zealand's NZX 50 slid 1.8%.
Regional stocks stumbled off the blocks after the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -1.39% shed more than 900 points in intraday trading before making a comeback of sorts to finish about 350 points lower. Technical glitches appeared to have exacerbated the sell-off, but the steep fall still shook up investor confidence, analysts said.
"[The fall] means that market sentiment is still weak and that investors are concerned about the situation in the European Union. There still might be some selling pressure ahead, depending on further developments in the E.U. and the situation after elections in the U.K.," said Conita Hung, head of equity markets at Delta Asia Financial Markets.
Although Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -1.39% futures were up 47 points in screen trading, a sharp fall in European markets ahead of a German parliamentary vote on aid for Greece kept pressure on shares in Asia in late trading.
In the afternoon, India's Sensex was down 1% and Singapore's Straits Times gave up 0.7%, while Indonesia's JSX and Thailand's SET Index dropped 2.8% each.
Banking stocks such as HSBC Holdings /zigman2/quotes/202687335/delayed HK:5 -2.30% and Standard Chartered /zigman2/quotes/202369078/delayed HK:2888 -4.83% /zigman2/quotes/208435361/delayed SCBFF +1.18% tumbled 4.3% and 4.8%, respectively, in Hong Kong, offsetting gains in shares of some Chinese lenders and property developers.
"In our view, the lack of a clear 'end game' for sovereign risk in Europe means that despite recent sharp declines in markets, this is not a buying opportunity. Positions may still be unwound," UBS analysts wrote in a note to clients.
Francis Lun, general manager at Fulbright Securities, attributed some of the selling pressure to Europe-based funds, which he said "probably might be facing redemption pressure at home." Still, there were signs that bargain buyers were selectively buying Chinese property and bank shares, he said.
Shares of China Construction Bank Corp. /zigman2/quotes/208974133/delayed HK:939 -2.17% /zigman2/quotes/207732534/delayed CICHY +0.22% rose 1%, China Overseas Land & Investment climbed /zigman2/quotes/205731176/delayed HK:688 -2.24% /zigman2/quotes/202573805/delayed CAOVY +0.39% 2.7% and China Resources Land /zigman2/quotes/202417326/delayed HK:1109 0.00% /zigman2/quotes/209191868/delayed CRBJY -2.06% surged 3.6% in Hong Kong.
The Hong Kong market was also supported by a 5.1% surge in shares of Swire Pacific /zigman2/quotes/204764173/delayed SWRBY -3.14% /zigman2/quotes/209399758/delayed HK:19 -0.57% after its property unit, Swire Properties, Thursday shelved its $3.09 billion Hong Kong initial public offering. Traders said the move was viewed positively, given recent weakness in property shares in the city state.
Taiwanese stocks also recouped some of their steep losses as airlines and some technology shares rebounded, though weaker financials offset their gains. China Airlines finished up 0.8% and AU Optronics climbed 0.9%, but China Financial Holding declined 0.9% and Chinatrust Financial Holding fell 1.5%.
Financials lost ground elsewhere in the region after the plunge on Wall Street, with Mitsubishi UFJ Financial Group /zigman2/quotes/207520099/delayed JP:8306 -2.33% dropping 2.5% in Tokyo, National Australia Bank /zigman2/quotes/210431826/delayed AU:NAB -3.05% /zigman2/quotes/208329321/delayed NABZY -3.33% shedding 5% in Sydney, DBS Group /zigman2/quotes/204572323/delayed SG:D05 -2.86% /zigman2/quotes/201424949/delayed DBSDY -0.57% sliding 2.3% in Singapore and ICICI Bank /zigman2/quotes/208917098/composite IBN -1.49% losing 2.1% in Mumbai.
Japanese shares briefly pared losses in early afternoon trade before slipping back, as exporters were hurt by the yen's steep appreciation overnight. The currency gave up some of those gains in Asian trading.
Shares of Sony /zigman2/quotes/208567357/composite SNE +2.15% /zigman2/quotes/201361720/delayed JP:6758 -3.87% dropped 3.2% and Panasonic /zigman2/quotes/201785256/delayed JP:6752 -4.85% lost 2.5%, while Honda Motor /zigman2/quotes/207173990/composite HMC -1.00% /zigman2/quotes/200490352/delayed JP:7267 -4.26% retreated 2.6%. Fast Retailing /zigman2/quotes/203924235/delayed FRCOY +1.16% /zigman2/quotes/200663563/delayed JP:9983 -2.84% tumbled 6% after saying late Thursday that April same-store sales at its Uniqlo casual clothing chain fell 12.4% year-on-year.