Stocks started the week with fresh selling in Asia as China's market fell anew after Thursday's slump, while indexes in South Korea and Taiwan lagged behind following downgrades to both locales' biggest companies.
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Chinese equities sent a shudder through global markets on Thursday when leading stock indexes there tumbled more than 2%. The market rebounded some Friday.
The CSI 300, which consists of the biggest stocks in Shanghai and Shenzhen, ended Monday-morning trading down 1.3%, though both cities' individual composite indexes fell less than 1%.
"It is quite clear that the People's Bank of China is trying to break the notion of an implicit guarantee" to all Chinese firms, said Xie Dongming, head of Greater China research at OCBC Bank.
He added that by raising funding costs for overleveraged and badly managed firms, the government is trying to move local markets toward global standards on pricing credit risks.
Chinese stocks have lagged behind global gains this year despite strong profit growth. Data showed Monday that industrial profits grew 25% in October from a year earlier, extending this year's strength. But Gao Ming, an analyst with China Merchants Securities, is among those expecting a slowdown to 10% to 15% next year.
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The decline in Chinese stocks rippled through the region. The Nikkei was recently down 0.5% after rising as much as 0.5% shortly after the open. Investors bought haven assets such as the yen, with the dollar falling to Yen111.40 from Yen111.70 earlier in the session.
Australia's benchmark also turned slightly lower for a time after initial gains; China is the country's biggest trading partner. The S&P/ASX 200 was recently up 0.1%, one of the few Asia-Pacific indexes higher on Monday.
Meanwhile, New Zealand's NZX 50 climbed 0.6%, notching its first record closing high of November after posting 17 of them in October. Auckland International Airport rose 2.5%, and a2 Milk added 1.7%.
But that was a lone bright spot.
South Korea's Kospi slid 1.4% and Taiwan's Taiex dropped 1% after Morgan Stanley downgraded Samsung and Taiwan Semiconductor, each their respective index's largest component by far.
The investment bank says there are early signs of price pressures for NAND flash memory while there is less visibility for DRAM, which powers personal computers, "and risk of higher capacity growth may overwhelm demand growth and oversupply in 2019-20.
Samsung was recently down 4%, cutting the year's gain to 48%, while Taiwan Semiconductor shed 2.5%, reducing its advance to 31%.
The start-of-week decline for most Asian stock markets followed late-week holidays in Japan and the U.S., and came ahead of major global economic releases around the world later this week.
"We expect a steady stream of positive growth data in Asia this week--from Japan and South Korea's industrial production to Australia's capex and India's GDP," said Klaus Baader, head of research for Asia at Société Générale.
In commodities, the U.S. oil benchmark pulled back some after hitting a 2 1/2 -year high on Friday. January Nymex WTI futures were recently down 0.4% at $58.72 a barrel, while Brent futures were little changed.
Grace Zhu contributed to this article.
Write to Kenan Machado at firstname.lastname@example.org
(END) Dow Jones Newswires
November 27, 2017 00:24 ET (05:24 GMT)