Chinese shares closed sharply lower Wednesday as the benchmark Shanghai 300 Composite Index fell 197.31, or 5.3%, to close at 3,558.51 on disappointing Chinese corporate profits, and falling commodity prices and fears of possible central bank moves to tighten lending.
The loss erased most of the gains made over the previous five sessions, and marked the Shanghai index's biggest percentage drop since Nov. 18. Daily volume hit a record 302.81 billion yuan ($44.3 billion U.S.).
Chinese policy makers in recent weeks have flagged inflationary worries and possible asset bubbles since lending exploded. New yuan loans in the first half of the year totaled 7.4 trillion yuan ($1.08 trillion U.S.), equivalent to about half of the country's gross domestic product in the period. The loan growth has spurred calls by economists for the central bank to fine-tune its policies.
Still, the People's Bank of China has signaled no reversal of its moderately loose monetary-policy stance, which is aimed at spurring growth in the world's third-biggest economy.
Leading the declines in Shanghai, China Cosco Holdings tumbled 8.4%, while Jiangxi Copper lost 9% after saying it expects first-half net profit to drop between 57% and 64% from a year earlier. Both had hit their daily limit of a 10% decline. In Hong Kong, China Cosco fell 6.7% while Jiangxi lost 8.5%.
Shanghai's decline, which at one point reached 7.7% before recovering slightly, came despite successful debuts for two China-linked stocks. China State Construction Engineering Corp. and cement maker BBMG both jumped on their debut.
In Shanghai, CSCEC shares ended at 6.53 yuan compared with the initial public offering price of 4.18 yuan -- though the finish was toward the lower end of the stock's trading range for the day. Earlier, the stock jumped as high as 7.96 yuan. The $7.3-billion U.S. IPO - the world's biggest so far in 2009 - was heavily oversubscribed. Shares of BBMG ended at HK$9.97 in Hong Kong, also well above its IPO price of HK$6.38.
The Nikkei 225 index in Tokyo gained 25.98 points Wednesday, or 0.3%, to 10,113.24. In Hong Kong, the Hang Seng index plummeted 489.04 points, or 2.4%, to 20, 135.50.
Most regional markets had started the day on a weak note, with sentiment damped after Wall Street pulled back on weaker-than-expected U.S. consumer confidence data, which weighed on crude-oil and commodity prices.
Commodity stocks fell around Asia, with BHP Billiton losing 1.6% and Rio Tinto down 2.4% in Sydney. In Tokyo, Inpex lost 1.7% and Japan Petroleum Exploration shed 1.9%.
Further weighing on energy share prices in Hong Kong was China's announcement that it would cut prices for refinery products. China Petroleum & Chemical Corp., or Sinopec, fell 5% and PetroChina was 3.9% lower. On the mainland, PetroChina sank 6% and Sinopec shed 0.8%.
In currencies, the yen appreciated against the U.S. dollar in late trading as Chinese stocks sold off. The dollar was recently buying Y94.37 compared with Y94.55 in late New York trade. The euro was lower, at Y133.68 from Y133.99 late New York and at $1.4162 U.S. from $1.4172 U.S. The Australian dollar was buying $0.8210 U.S., down from $0.8267 U.S.
Elsewhere:
Singapore’s Straits Times Index dumped 19.98 points, or 0.8%, to 2,604.06.
South Korea’s Kospi index slid 1.71 points, or 0.1%, to 1,524.32
Taiwan’s Taiex declined 59 points, or 0.8%, to 7,083.63
New Zealand’s NZX 50 Index gave back 28 points, or 0.9%, to 2,990.47
Australia’s S&P/ASX 200 ended its 11-session winning streak, by losing 26.70 points, or 0.6%, to 4,142.80.
