By Daniel Inman
Stocks in Shanghai and Hong Kong led Asia's losses Wednesday,
with Chinese banks falling on concerns about liberalization's
impact on their bottom lines, while a stronger yen weighed on
Japanese stocks.
The Shanghai Composite and Hong Kong's Hang Seng Index closed
1.5% and 1.7% lower, respectively, after news that China's four
state-owned banks and a former state policy bank will issue a total
of 19 billion yuan ($3.1 billion) of negotiable certificates of
deposit, the latest step in China's move toward less-restricted
interest rates. Liberalization has prompted concerns that the banks
will face short-term pressure on their profits.
Unlike ordinary bank deposits, the interest rate on the new
certificates requires the banks to negotiate the cost of capital
between themselves.
In Hong Kong, Agricultural Bank of China and China Construction
Bank fell 2% and 2.4%, respectively, while HSBC Holdings PLC
(HSBC), the single-largest constituent on the Hang Seng Index, fell
1.3% after it said it had agreed to sell its 8% stake in Bank of
Shanghai to Spain's Banco Santander SA (SAN) . HSBC didn't say how
much it was selling the stake for, but it valued the holding at
$468 million on Sept. 30.
More broadly, the region followed the U.S. lower, after stocks
on the Wall Street fell overnight as investors sold to cash in some
of the strong gains for the year and continued to worry about the
potential impact of a reduced Federal Reserve stimulus.
Speculation over when the Fed will start to roll back its
bond-buying program has been a persistent theme in Asia since the
early summer, when it sparked a series of selloffs in the region.
Recent employment data from the U.S. have been strong, which has
raised expectations that the Fed could start to withdraw its
stimulus as early as in its December policy meeting next week,
giving trading a general air of caution.
This caution could be seen in the dollar's movement against the
yen, which pulled back overnight, after spending much of Tuesday
with striking distance of challenging its year high. The dollar
(USDJPY) lost a total of 0.4% against its Japanese counterpart
overnight and was last trading at Yen102.73, compared with
Yen102.84 late Tuesday in New York.
The yen's push back against the dollar weighed on Japanese
stocks, with the Nikkei closed 0.6% lower.
South Korea's Kospi fell 0.8%.
In Australia, the S&P ASX 200 fell 0.8%, a three-and-a-half
month low, as investors continued to worry about the impact of a
flurry of initial public offerings hitting the market before the
end of the year.
Shares in QBE Insurance Group (QBIEY) gained 1.8% after J.P.
Morgan upgraded the company to neutral after falling a total of 32%
on Monday and Tuesday. The insurer's surprise profit warning
earlier this week had hit broader sentiment in Sydney.
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