HONG KONG: Asian shares tumbled on Wednesday as investors fretted over the impact which a second cut in China's currency in as many days will have on economies closely tied to the Asian giant.
The dollar declined slightly in Tokyo trade, after rising on news the People's Bank of China (PBoC) had again reduced the value of the yuan against the greenback.
Hong Kong lost 2.38 per cent, or 582.19 points, to end at 23,916.02, while Shanghai dropped 1.06 per cent, or 41.59 points, to 3,886.32 while the Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 1.54 per cent, or 35.09 points, to 2,249.18.
Other regional markets also lost ground, with Tokyo closing down 1.58 per cent, or 327.98 points, at 20,392.77, while Sydney ended 1.66 per cent lower at 5,382.10. Seoul ended 0.56 per cent, or 11.8 points, lower at 1,975.47.
Beijing's surprise devaluation of the yuan on Tuesday sent ripples through global financial markets and prompted a rout on Asia-Pacific currencies over concerns it could hurt other economies in the region.
The second yuan cut on Wednesday brings the reductions this week to 3.5 per cent - the largest in more than two decades - in a move widely seen as designed to boost China's flagging economy.
Concerns about China's stalling growth were compounded on Wednesday when three key indicators - industrial production, retail sales and fixed asset investment - all came in below market expectations.
"Today's weak fixing indicates the PBOC wants to see further depreciation in the yuan, as yesterday's drop won't be enough to prop up China's exports," Kenix Lai, a foreign-exchange analyst at Bank of East Asia in Hong Kong, told Bloomberg News.
"Capital will flee from China to the US due to the economic slowdown and the yuan devaluation."
CHINA-FOCUSED STOCKS FALL
Wall Street tumbled Tuesday on the initial devaluation, with the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite Index all closing down around one per cent or more.
In Tokyo share trading Wednesday, automaker Toyota fell 1.66 per cent to ¥7,987, while Nissan, also dependent on China for sales, dropped 2.09 per cent to ¥1,168.5.
Airlines lost ground in Shanghai on worries that a weaker yuan will raise the cost of servicing US dollar-debt. Air China fell 5.04 per cent to 10.92 yuan and Hainan Airlines dipped 3.28 per cent to 5.30 yuan.
In Hong Kong, development stocks also took a hit from debt concerns, with with China Resources Land dropping 7.92 per cent to HK$19.80 and China Overseas Land & Investment giving up 8.51 per cent to HK$23.10.
Commodities also lost ground on concerns that demand is set to fall in Asia's biggest economy - a major importer of energy, metals and grains - with oil sinking to a six-year low.
Oil prices came under further pressure from news the OPEC producer cartel raised output in June, adding to a global supply glut.
US benchmark West Texas Intermediate for delivery in September fell to US$42.99 a barrel on Wednesday, after hitting US$43.08 in New York - the lowest level since March 2009.
European benchmark September Brent crude for September slipped 26 cents to US$48.92 in afternoon trade.
Safe-haven gold fetched US$1,117.50 compared to US$1,110.35 late on Tuesday.
In Tokyo forex trade, the dollar was worth ¥124.53 on Wednesday afternoon, down from ¥125.12 in New York late on Tuesday.
The euro, meanwhile, strengthened to US$1.1131 and ¥138.61 compared with US$1.1042 and ¥138.15 in US trade, after Greece's government agreed the text for a €85 billion (US$94 billion) international bailout.
In individual results, Commonwealth Bank of Australia said full-year net profit rose five per cent to a record A$9.063 billion (US$6.62 billion). Shares halted trading ahead of a A$5 billion capital-raising.
The Hong Kong stock exchange said its first-half earnings surged 73 per cent to a record high as it reaped the benefits of a link-up with the Shanghai bourse.
In other markets:
-- Mumbai fell 1.27 per cent, or 353.83 points, to close at 27,512.26.
Infosys rose 3.39 per cent to 1141.75 rupees but Vedanta plummeted 8.03 per cent to 113.90 rupees.
-- Singapore closed down 2.90 per cent, or 91.57 points, to 3,061.49.
Agribusiness company Wilmar International eased 1.30 per cent to Sg$3.03 while real estate developer Capitaland fell 4.69 per cent to Sg$3.05.
-- Kuala Lumpur fell 1.64 per cent, or 26.78 points, to close on 1,609.93.
Sime Darby fell 1.47 per cent to 8.04 ringgit, Malaysian Banking fell 1.29 per cent to 8.41 ringgit, and Petronas Gas lost 0.46 per cent, ending at 21.48 ringgit.
-- Jakarta ended down 3.10 per cent, or 143.10 points, at 4,479.49.
Bank Mega gained 7.41 per cent to 2,900 rupiah while textile and garment company Sri Rejeki Isman fell 13.43 per cent to 303 rupiah.
-- Wellington fell 1.12 per cent, or 65.14 points, to 5,757.21.
Spark New Zealand was 2.46 per cent off at NZ$2.77 while Fletcher Building closed 2.05 per cent down at NZ$7.64
-- Taipei fell 1.32 per cent, or 110.76 points, to 8,283.38.
Taiwan Semiconductor Manufacturing Co. dropped 1.53 per cent to NT$128.50 while Hon Hai Precision Industry lost 2.26 per cent to NT$86.50.
-- Manila lost 0.99 per cent, or 75.02 points, to 7,495.43.
Top-traded Semirara Mining and Power rose 1.96 per cent to 130 pesos, but BDO Unibank lost 1.92 per cent to 102 pesos and Manila Electric fell 2.09 per cent to 300 pesos.
Bangkok was closed for a public holiday.
AFP
