Asia stocks came under strong selling pressure Thursday, with banks putting in a particularly weak performance across the region as the first quarter of the year drew to a close for some markets.
Chinese stocks slumped as banks there faced an additional drag after the banking regulator there issued new rules Wednesday to improve transparency and disclosures related to the wealth-management products marketed by the lenders.
The Shanghai Composite Index was by far the region’s worst performer, slumping 2.8% for its worst one-day loss since March 4. Hong Kong’s Hang Seng Index fell 0.7%.
Elsewhere, Japan’s Nikkei Stock Average fell 1.3%, while Australia’s S&P/ASX 200 lost 0.6% and South Korea’s Kospi ended little changed.
Thursday’s losses came as the trading week wound down for many markets, with Australian, Hong Kong, Indian, and Singaporean bourses to be closed Friday, along with most of those in Europe and the U.S.
It’s been a mixed quarter so far for Asia, with Japan’s Nikkei rising 18.7% and the Australian benchmark gaining 6.8%, while the Shanghai Composite and the Hang Seng Index lost between 1% and 2%.
Wall Street stocks ended lower in Wednesday’s trading session, although the Dow Jones Industrial Average and the S&P 500 index remained near all-time highs despite the retreat.
Worries over Italy added to investor concerns related to Cyprus, after Italian politician Pier Luigi Bersani ruled out the formation of a coalition government. Bersani reportedly said that only an “insane person” would want to govern Italy and that the country is a “mess.” Italy has struggled to put together a government since inconclusive elections in late February.
Additionally, Italian caretaker Prime Minister “Mario Monti’s comment that the current government ‘can’t wait to have its mandate rescinded’ is unlikely to help sentiment either,” said Crédit Agricole strategist Gary Yau.
“Looking forward, Europe will again be in focus today as Cypriot banks are set to reopen with strict capital-control measures in place,” Yau said.
Chinese banks suffered big losses after the banking regulator issued new rules on wealth-management products. The regulations demand that banks clearly link such products with specific assets.
The opacity of the products makes it difficult to tell how much of a risk they represent to the health of the Chinese economy should the investment products turn sour.
Banks trading in Shanghai took some heavy losses, with China Merchants Bank Co. sliding 5%, and China Citic Bank Corp. plunging 9.1%.
Hong Kong-listed shares of the mainland Chinese banks also stumbled, with China Merchants Bank dropping 4.2%, China Citic Bank shedding 4.1% and Bank of Communications Co. declining 4%.
Non-Chinese banks suffered in Hong Kong too, with index heavyweight HSBC Holdings PLC dropping 1% as the market awaited the slated reopening of the Cyprus banks.
Banks were also leading losses over in Japan. Mizuho Financial Group Inc. dropped 2.4%, while Sumitomo Mitsui Financial Group Inc. lost 1% and Shinsei Bank Ltd. retreated 2.3%.
Mitsubishi Motors Corp. tumbled 3.9% after reporting two malfunction incidents with batteries made in a joint venture with GS Yuasa Corp. , which slumped 11.1%.
South Korean car makers were also seeing some weakness, with Kia Motors Corp. down 1.4%.
Aluminum Corp. of China Co. dropped 4.5% in Hong Kong after reporting a worse-than-expected loss for 2012 of 8.23 billion yuan ($1.3 billion).
The result was hurt by higher raw-material costs and lower prices for aluminum, and the loss was almost double the 4.78 billion yuan analysts had been expecting.