Australian shares hit a fresh two-year low, though China shares bore the brunt of the region’s losses, after manufacturing data from the world’s number-two economy stoked further worries about the spillover effects of its slowdown.
Japanese markets remained shuttered for holiday
In Hong Kong, the Hang Seng Index collapsed 493.67 points, or 2.3%, to 21,302.91,
The data came just as Chinese President Xi Jinping kicked off his first state visit to the U.S., where he reaffirmed his commitment to economic reforms
Australia’s S&P ASX 200 closed off, led by mining stocks. Wednesday’s losses mark the sharpest decline in two weeks for the index, which has fallen 17% since coming close to breaking above 6,000 during intraday trading in mid-April.
Shares in Australia, which counts China as its largest export market, have fallen most in the region so far this week. Its 3.3% decline week-to-date more than wipes out gains in the previous two weeks.
Among mining shares, BHP Billiton Ltd. lost 4.4% on Wednesday, with shares ending at their lowest level in almost seven years.
Asian currencies sensitive to Chinese demand also depreciated further, as the weak factory reading added to many factors weighing on emerging-market exchange rates, including weak global demand and the prospect of higher interest rates in the U.S.
The Australian dollar was 0.6% weaker, both against the U.S. dollar, compared with late in Asia the previous day. The latter was heading back to $0.70, a level it dipped below earlier this month for the first time in years. Most analysts expect emerging-market currencies to continue weakening.
The Japanese yen was last flat at ¥120.08 to the U.S. dollar.
CHINA
The CSI 300 in Shanghai lost 76 points, or 2.3%, to 3,263.03
An early reading of Chinese manufacturing activity from Caixin Media Co. and research firm Markit Ltd. fell to 47.0 in September, a six-and-a-half year low, from a final reading of 47.3 in August. A figure above 50 indicates expansion from the previous month, while a reading below that indicates contraction.
During his seven-day visit, Xi seeks to reassure U.S. business leaders about China’s economy, pledging Tuesday at a welcoming dinner in downtown Seattle to push ahead with economic reforms.
China’s stock market has reached a point of "self-recovery and self-adjustment," said Xi, who also defended his government’s attempt to support Chinese share prices in recent weeks.
But with the Shanghai market down 39% from a June peak, a recovery, if any, is likely to be a slow one
The initial gauge of China’s September factory activity follows on the heels of the U.S. Federal Reserve’s decision last week to leave its interest rates unchanged, a move that had shaken some investors’ outlook on the economic health of the world economy.
On Tuesday, the Asian Development Bank cut its growth forecast for the Asia region to 5.8% in 2015 and 6.0% in 2016 from 6.3% previously forecast for both years. The Manila-based development lender cut China’s growth forecast for this year to 6.8% from 7.2%.
In other markets
In Korea, the Kospi index dropped 37.42 points, or 1.9%, to 1,944.64
In Singapore, the Straits Times Index slid 22.73 points, or 0.8%, to 2,845.74
In Taiwan, the Taiex index swooned 172.5 points, or 2.1%, to 8,193.42
The NZX 50 moved south 42.44 points, or 0.8%, to 5,654.34
The ASX 200 Index sank 105.42 points, or 2.1%, to 4,998.13
