Chinese shares tumbled on Monday due to a sharp selloff in the financial and property sectors, while a positive handover from Wall Street underpinned gains in the rest of Asia.
Financial stocks listed in Shanghai collapsed by the daily trading limit of 10 percent after regulators charged several brokers with illegal activities in margin trading. The losses came a day before the release of China's fourth quarter gross domestic product (GDP) on Tuesday. The report is expected to show the economy grew 7.2 percent on year, according to a Reuters poll, down from 7.3 percent in the third quarter.
"This is a bloodbath in Chinese equities," said Stan Shamu, market strategist at IG. "While this is putting a dent in equities in the near term, the intentions seem good as officials continue to reign in reforms and curb excessive speculation."
Meanwhile, U.S. stocks closed higher for the first session in six last week, with all three major indices closing over 1 percent higher on the back of rising crude oil prices and strong consumer price data. Wall Street is closed on Monday, and the State of the Union speech by President Barack Obama on Tuesday will be closely watched.
Global markets are also awaiting the European Central Bank's (ECB) policy decision on Thursday, when it is widely expected to announce a government bond buying plan to stimulate the euro zone.