Asia markets traded mostly lower Wednesday, with Japanese shares dropping sharply after disappointment over the Bank of Japan’s latest moves lifted the yen.
Japan’s Nikkei Stock Average fell 2.1%, backing away from a near-three-year high hit late last week. South Korea’s Kospi slipped 0.4%, and Taiwan’s Taiex declined 0.2%.
In Chinese trading, Hong Kong’s Hang Seng Index lost 0.4%, after ending the previous session at a level not seen since May 2011, while the Shanghai Composite Index declined 0.8%, paring steep gains made since early December to just over 17%.
Among the few regional advancers, Australia’s S&P/ASX 200 index ended with a gain of 0.1% after closing at its best level since mid-May 2011 on Tuesday.
The Tokyo market extended its declines made Tuesday after the Bank of Japan announced it would start open-ended asset purchases — but not until 2014, when its current asset-buying program expires.
The open-ended buying won’t involve large purchases of longer-dated Japanese government bonds and will essentially increase the asset-purchase program by around ¥10 trillion ($112 billion) in 2014, according to Capital Economics chief global economist Julian Jessop.
The program was increased by that amount five times in 2012, he said.
“Tuesday’s policy overhaul by the Bank of Japan disappointed the markets, and rightly so,” Jessop said of the policy decisions, which also included the setting of a formal 2% inflation target.
“Calling a policy ‘bold’ does not necessarily make it so,” he said.
The Bank of Japan decision strengthened the yen, which had fallen sharply since late last year on anticipation of more aggressive and immediate easing. The dollar traded at ¥88.29 Wednesday, down from a recent high above ¥90 hit earlier in the week.
This in turn hammered many blue-chip exporters: Nikon Corp. lost 2.6%, Nissan Motor Co. traded 2.8% lower, and Mazda Motor Corp. gave up 3.7%.
Some of the heaviest losses were in the technology sector, as Advantest Corp. fell 5.5%, while NEC Corp. lost 3.9% and Ricoh Co. dropped 3.8%.
TDK Corp. retreated 4% after a Nikkei report tipped the firm’s October-December operating profit at 30% below year-earlier levels.
Japanese shares have fallen as investors “do not agree with the prime minister that the quantitative easing announced will boost the market,” said Peter Lai, director at DBS Vickers.
Hong Kong property developers helped to lead losses, with Henderson Land Development Co. down 2.7% and China Resources Land Ltd. down 2.1%
Gains for a handful of globally exposed names helped limit the Hong Kong losses, however, with ports operator Cosco Pacific Ltd. making a 0.2% advance, and tech major Lenovo Group Ltd. [ improving by 2.9% in the wake of strong earnings reports from Google Inc. and International Business Machines Corp. after the U.S. market close Tuesday
In mainland China, losses were more broad-based, with Shenzhen-traded property major China Vanke Co. falling 1.5%, Jiangxi Copper Co. losing 1.3% in Shanghai, and car maker SAIC Motor Corp. dropping 1.4%, also in Shanghai.
DBS Vickers’ Lai said the Shanghai market was correcting after its recently strong performance.
Lai expects the Shanghai Composite to move toward 2,500 during the first half of 2013 — with the index trading at 2,311 late Wednesday — as it’s lagged other global stock indexes significantly since 2009.
In South Korea, auto major Hyundai Motor Co. gained 1.4%, helped by the rising yen and its detrimental effect on Japanese rivals.
But losses for other majors sent the market lower, with Woori Finance Holdings Co. falling 2.4% and Korea Electric Power Corp. declining 1.2%.
Meanwhile, Australian stocks extended multi-year highs, helped by gains in the mining sector Wednesday.
Copper extractor PanAust Ltd. advanced 0.9% after announcing a refinancing of its debt facilities.
Diversified mining giant BHP Billiton Ltd. gained 1.3% after announcing an increase in quarterly iron-ore production, while sticking to its full-year iron-ore production target.
Asia’s weaker tone contrasted with overnight gains on Wall Street, where U.S. investors returned from a three-day break to push shares higher Tuesday, helped in part by earnings.
“Positive earnings releases in the U.S. and comments by European Central Bank President Mario Draghi that the ‘darkest clouds over the euro area subsided’ [in remarks] overnight will likely continue to provide support for risk appetite,” Crédit Agricole strategist Anthony Lam said.
Marketwach
