Asia Stocks Fall Amid Doubts Over China Growth

Asia stock benchmarks fell Thursday, as a surprise rate cut in South Korea, lack of central bank policy action from Japan, and weak jobs data from Australia kept investors on edge a day before the release of a likely downbeat report on Chinese growth.

Japan’s Nikkei Stock Average JP:100000018 -1.48%  ended down 1.5%, South Korea’s Kospi KR:SEU -2.24%  tumbled 2.2%, and Australia’s S&P/ASX 200 index AU:XJO -0.70%  lost 0.7%.

In China, Hong Kong’s Hang Seng Index HK:HSI -1.83%  fell 1.7%, while the Shanghai Composite Index CN:000001 +0.55%  edged up 0.5%.

The day began on a weak note in Asia, after a lack of clarity on future easing measures from the Federal Reserve weighed on U.S. stocks Wednesday. Read more on the U.S. session.

Linus Yip, strategist at First Shanghai Securities in Hong Kong said disappointment over any imminent easing by the U.S. Federal Reserve was draining confidence across the region.

”A lack of QE3 is negative for global markets,” Yip said, referring to a third round of monetary stimulus, or quantitative easing, from the Fed. He said investors were also cautious ahead of Friday’s much-anticipated Chinese second-quarter economic growth figures.

“Markets are occupied with the slowing in China. If GDP goes down to 7% or 7.2%, it won’t be a good sign. But it may also mean more action from the People’s Bank of China, and markets may jump at that,” Yip said. Read MarketWatch First Take on coming China data.

Concerns about the region’s slowing growth were bolstered after the Bank of Korea delivered a surprise 0.25-percentage point cut to its benchmark rate, bringing it to 3%. Read more on South Korea rate cut.

The unexpected rate cut “raised concerns about intensifying downside risk to Asian growth ahead of Singapore and Chinese GDP tomorrow,” said strategists at RBC Capital Markets.

Adding to growth worries, official data from Australia showed the country’s seasonally-adjusted unemployment rate increased 0.1 percentage points to 5.2% in June.

Meanwhile, the Bank of Japan left ultra-low interest rates unchanged at its policy meeting Thursday. The BOJ reaffirmed its commitment to steadily increasing the size of its asset purchase program, but didn’t announce any immediate increase in the overall size of the program. Read more on the BoJ meeting.

Banks pressured

Bank and property shares sold-off sharply in Hong Kong. Industrial & Commercial Bank of China Ltd. HK:1398 -2.45%   IDCBF -4.36% CN:601398 -0.27%  lost 2.7%, and China Merchants Bank Co. HK:3968 -3.07%   CIHHF -3.23%   CN:600036 +0.40%  retreated 2.2%.

In the property sector, Agile Property Holdings Ltd. HK:3383 -3.14% AGPYY +9.50%  sank 3.3%, and New World Development Co. NDVLF +11.61% HK:17 -2.23%  traded down 2.3%.

Luxury plays were also heavy decliners in Hong Kong, as Prada SpA HK:1913 -4.26% PRDSY -1.83%  gave up 2.7%, and Chow Tai Fook Jewellery Group Ltd. HK:1929 -8.78%  slumped 7.7% after reporting a fall in its Hong Kong same-store sales in the most recent quarter.

Losses for many blue-chip exporters accelerated in Tokyo during the session, with the BOJ decision giving the yen a lift against the U.S. dollar.

Renesas Electronics Corp. JP:6723 -8.93%   RNECY -4.85% plunged 8.9%, while Sharp Corp. JP:6753 -7.02%   SHCAY -2.21%  sank 7% and Panasonic Corp. JP:6752 -4.47% PC -3.93%  gave up 4.5%.

Nomura Holdings Inc. JP:8604 -2.54% NRSCF -0.48% NMR +0.88% slumped 2.5%, Aozora Bank Ltd. JP:8304 -1.63% retreated 1.6%, and Daiwa Securities Group Inc. JP:8601 -1.81% DSEEY +1.47%  eased 1.8%.

Hitachi Construction Machinery Co. JP:6305 -2.14%  lost 1.6% despite a Nikkei report that operating profit for the April-June quarter was expected to jump following strong U.S and Japanese sales.

Korean shippers slide

Heavy falls for shipping-related firms worked to drag the South Korean index lower, Samsung Engineering Co. lost 1.7% and Hyundai Heavy Industries Co. pulled back 1.2%.

Shares of Hyundai Motor Co. HYMLY -0.0052%  sank 3.1%, while Kia Motors Corp. slipped 1.2%, after a wage dispute saw workers vote in favor of their first strike action in years. Read more on the Hyundai, Kia strike.

Resource shares retreated across Asia following a mostly weak overnight session for commodity markets. Hong Kong-listed Aluminum Corp. of China Ltd. HK:2600 -3.16%   ACH +0.30%  sank 2.8% and China Coal Energy Ltd. HK:1898 -0.78%   CCOZY +3.29%  traded down 1.7%.

Global miners BHP Billiton Ltd. AU:BHP -2.09%   BHP +0.70%  and Rio Tinto Ltd. AU:RIO -2.52%   RIO +1.36%  dropped 2.1% and 2.5%, respectively, in Sydney.

MarketWatch