ASIA MARKETS: Asian Markets Mostly Slide Lower Following U.S. Selloff

By FeaturesDow Jones Newswires

Chinese stocks buck the trend following crackdown on shadow banking

Asian stocks were mostly lower Wednesday following a late selloff in U.S. equities and after some markets logged fresh highs Tuesday.

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Hong Kong's Hang Seng Index topped 2007's record-high close on Tuesday while Singapore's main stock index breached 2015's high, getting to levels last seen in 2007.

Stock benchmarks in Japan and Taiwan scored their highest levels in a quarter of a century and record highs were set in several Southeast Asian countries Tuesday.

Japan's Nikkei finished Wednesday's morning session down 0.4% as the dollar weakened. The dollar fell below Yen110.25 in Asian trading, from Yen110.85 at the end of local stock trade Tuesday, but has subsequently bounced to Yen110.60.

Similar-sized stock declines were seen in Hong Kong , Australia and South Korea while markets in southeast Asia logged smaller losses.

Shanghai's stock market however bucked the region and continued to rise, putting its main benchmark on pace to finish at its best levels in two years. The Shanghai Composite Index was up 0.8% thanks to strength in bank stocks.

The sector has been helped by the government's crackdown on shadow banking. Michael Chang, head of China financials at broker CIMB said that with the big banks dominating financing activity, they should be able to charge higher rates and boost their earnings.

Guo Shuqing, the head of China's banking regulator, told the People's Daily that shadow banking and illicit financial activities still exist, posing threats to financial stability. Guo added the country's banks should aim to reduce corporate and household leverage to curb real-estate bubbles.

But markets will eventually "welcome and celebrate" the reforms that lead to a more sustainable and balanced growth in China, said Raphael Marechal, head portfolio manager for emerging markets at Nikko Asset Management. "China is certainly slowing down but the quality of growth is improving."

The Shanghai stock gains didn't carry south to Shenzhen, where many smaller companies are listed. The Shenzhen Composite Index was down 1%.

New Zealand stocks were higher with the NZX-50 up 0.4% as A2 Milk (ATM.NZ) rose 3.1% on news that it plans to increase its distribution in the U.S. Still, the market is underperforming the region, with the benchmark index down for January after rising every month last year.

Oil futures rose about 0.2% in Asia to reverse some of Tuesday's pullback and bitcoin was trading around $11,000 after plunging about 25% on Tuesday.

(END) Dow Jones Newswires

January 16, 2018 23:05 ET (04:05 GMT)

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