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Australia, Malaysia stocks underperform on oil turmoil

Asian equity markets were mixed amid choppy trade on Wednesday as the hunt for a bottom in oil prices continues, while nagging worries over Greece curbed trading sentiment. Shares in Sydney and Kuala Lumpur were among the biggest laggards in the region for the day.

Overnight, U.S. stocks settled lower as data pointing to a slowing growth in the U.S. service sector weighed on trading sentiment. The Dow Jones Industrial Average dropped 0.7 percent while the tech-heavy Nasdaq declined 1.3 percent. The S&P 500 shed 0.9 percent, but managed to bounce back above 2,000 near the close of Tuesday's trade.

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Oil prices remained near five-and-a-half year lows in early Asian trading on Wednesday as mounting fears over a supply glut persists. There were no signs of a turn-around, with Brent crude futures trading at $50.95 a barrel, down 15 cents from their last close.

"The oil sell-off will continue and, until oil finds bottoms, the markets will remain in a downward trajectory, wrote IG market strategist Evan Lucas. "With no major economic news due for a week in this region, Asia will blindly follow the U.S.'s lead."

Symbol
Name
Price
 
Change
%Change
NIKKEI
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HSI
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ASX 200
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SHANGHAI
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KOSPI
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CNBC 100
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ASX eases 0.2%

Australia's key S&P ASX 200 index finished lower for the second consecutive session, despite recouping some of its morning losses, as the rout in oil markets continued to exert pressure on the resource-heavy bourse.

Energy-related counters extended Tuesday's declines; Oil Search and Santos fell nearly 2 percent each, while Woodside Petroleum finished 0.9 percent lower. Santos is in focus for the day amid concerns over the firm's credit rating.

Supported by a recovery in iron ore prices, junior miners like Atlas Iron scaled up 7.8 percent while BC Iron closed up 8.7 percent, limiting losses on the bourse.

The Australian dollar hovered near multi-year lows to fetch $0.8070 to the dollar on Wednesday.

Meanwhile, a private survey released before the opening of trade showed some improvement in the Australia's services sector in December. The Australian Industry Group's performance of services index (PSI) rose 3.7 points in the last month of 2014 to stand at 47.5, but remained below the 50 mark that marks growth from contraction.

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Nikkei flat

Japanese equities pared losses to end flat on Wednesday, on the back of a stronger yen which traded at 118.98 against the greenback. In the previous session, the benchmark Nikkei 225 posted its biggest fall in nearly 10 months to finish at a near three-week low.

McDonald's Japan fell nearly 1 percent ahead of its press conference today over food safety. A 3 to 4 centimeter-long piece of vinyl was found in a chicken nugget sold at an outlet in northern Japan over the weekend.

Daikin Industries erased losses to rebound 0.6 percent on news that the air conditioning and refrigeration maker will spend $420 million for the expansion of its Goodman operations in the U.S.

Mainland indices up

Chinese stocks finished 0.7 percent higher on Wednesday, hovering near five-year highs. The benchmark Shanghai Composite index flitted between gains and losses earlier, as news of more initial public offerings dampened positive momentum. Traders fear that the approval of 20 initial public offerings by the China Securities Regulatory Commission may sap liquidity out of the market.

Among gainers, Airlines rallied for a third straight day on the back of cheaper fuel. Air China led the sector with a near 3 percent gain, while China Eastern Airlines and China Southern Airlines scaled up 1.4 and 1.1 percent, respectively.

Mainland brokerages were also higher after the country's regulator said it planned to relax rules for securities firms to set up subsidiaries. Citic Securities and Haitong Securities rocketed 4.2 and 3.4 percent each while Founder Securities closed up nearly 1 percent.

A recovery in energy plays also supported the bourse higher; PetroChina settled 6 percent higher while Sinopec and China Oilfield Services reversed losses to climb 2.4 and 0.6 percent, respectively.

Meanwhile, Hong Kong's Hang Seng index reversed early losses to climb 0.5 percent in the afternoon session.

Read MoreAre China's shares at the cusp of a bull run?

Kospi adds 0.1%

South Korean shares recovered from early losses to finish slightly higher, as blue-chip stocks finished broadly higher on Wednesday, but remained not too far away from a more than one-year low of 1,876 points.

Hyundai Motor, the second heaviest weighting stock on the Kospi index, notched up nearly 4 percent after announcing that it would invest 81 trillion won over the next 4 years into expanding factories globally, as well as R&D purposes. Steelmaker Posco and utility Kepco also traded 1.6 and 3.1 percent higher, respectively.

Also in focus was Samsung Electronics which unveiled four mid-to-low end Galaxy models in India. Shares of the electronics giant doubled gains in the afternoon session to close up 1 percent.

LG Display, which plans to increase production capacity of its organic light-emitting diode (OLED) TV panels, climbed 2.5 percent.

Emerging Asia in focus

Malaysia appears to be the worst hit among emerging markets in Asia, as the turmoil in oil markets persists. Data showing an unexpected rise in exports for the month of November provided little respite; the benchmark FTSE Bursa Malaysia KLCI index is headed for its sixth straight losing session on Wednesday, with a decline of 0.4 percent.

In the FX space, the Malaysian ringgit fell to its lowest level since August 2009, fetching 3.5680 per dollar while the Indonesian rupiah traded at 12,730 - its lowest levels in 3 weeks.

India's Nifty index reversed gains to fall 0.3 percent by the session close.