China shares finished lower in tumultuous trading Monday, as weak data on Chinese factory output pulled prices down despite apparent efforts by Beijing to prop them up.
In Japan, the Nikkei 225 index slumped 298.52 points, or 1.6%, to 17,965.70, as the Bank of Japan kicked off a two-day policy meeting.
In Hong Kong, the Hang Seng Index restored 57.53 points, or 0.3%, to 21,561.90.
A massive selloff in August had already left many stock benchmarks in the region off more than 10% from recent peaks. And while markets found sturdier footing last week—shares in Shanghai, Hong Kong and Japan rebounded after a number of down weeks in a row—volatility was returning to Chinese domestic shares, a pressure point for neighbouring markets.
Investor confidence that the Fed won’t raise rates on Thursday is growing. In a survey released Friday, a majority of economists polled by The Wall Street Journal said it won’t.
Stock-market volatility in the U.S. has eased in the past two sessions; Fed officials have said they will consider recent market turbulence and the outlook for the global economy when making their decision.
Asian shares actually started higher Monday, before China shares took a dive. Late Monday in Asia, U.S. stock futures were up slightly. U.S. stocks closed higher Friday, capping their biggest weekly gain in nearly six months.
Speculation is that Bank of Japan Governor Haruhiko Kuroda may say something at a press conference Tuesday to shed light on a potential expansion of Japan’s easing program — which would be a positive for the Nikkei, now down roughly 14% from its late-June peak.
Traders are refraining from aggressive trading before then.
Down 4.9% month-to date, the Nikkei have suffered most in the region
Currencies gave up earlier gains to trade near flat, but the Japanese yen was up 0.1% against the U.S. dollar, and is expected to rise as expectations grow for the Fed to hold back on raising rates.
CHINA
The CSI 300 in Shanghai dropped 66.06 points, or 2%, to 3,281.47
On Sunday, data showed China’s factory output and fixed-asset investment were both weaker than expected in August, underlining challenges Beijing faces in pushing the economy to reach its full-year economic-growth target of about 7%.
Some 1,417 stocks trading in Shanghai and Shenzhen fell by the 10% daily limit set by regulators Monday, the most since Aug. 25, when 1,968 stocks were limit-down and the Shanghai market dropped 7.6%.
The losses came even as analysts suspected Beijing of propping up the market again: An index of Shanghai’s largest 50 stocks, mostly state-owned enterprises, was up 1.5%.
Underscoring investor concerns toward China’s volatile stock market, index provider FTSE Russell decided early Saturday Asia time against adding mainland-listed shares to its global indexes. The decision was a further blow to China’s efforts to attract global capital; MSCI Inc. in June also said it wouldn’t include the stocks, known as A shares, in its widely followed emerging-market index.
In China, the Shanghai Composite is off nearly 40% from its June peak, as the government continues to try to cheer up investors with positive rhetoric.
On Sunday, a blueprint released by Chinese authorities outlined plans to enhance state companies’ returns by letting them add private investors and to improve state companies’ competitiveness overseas by making them larger. The plan represents a modest adjustment to China’s brand of state capitalism.
It gave no definitive time frame for reforms but said “decisive results” in reforming state companies must be seen by 2020.
In other markets
In Korea, the Kospi index fell 9.91 points, or 0.5%, to 1,931.46
In Singapore, the Straits Times Index returned from holiday to slid 16.56 points, or 0.6%, to 2,871.47
In Taiwan, the Taiex index inched up 1.47 points to 8,307.29
The NZX 50 regained 17.65 points, or 0.3%, to 5,665.87
The ASX 200 Index recovered 25.39 points, or 0.5%, to 5,096.47
