Mainland indices mixed
Another choppy session ensued in mainland markets, with China's Shanghai Composite index transcending between positive and negative territories before closing up 0.3 percent to another fresh 7-year high.
Analysts attribute the volatility to the deluge of economic data due tomorrow, including China's first-quarter gross domestic product (GDP) which could likely hit a multi-year low. "It's safe to say investors in China are positioning for some disappointing data and the weak trade balance suggests GDP could undershoot this week and risks slipping below the expected 7 percent," Stan Shamu, IG's market strategist, wrote in a note.
In Hong Kong, the key Hang Seng index closed down 1.6 percent, seemingly on the back of profit-taking, following a blistering run-up of nearly 13 percent over the past 8 sessions. Fueled by a surge in interest from mainland-based investors, the city's bourse rose above the 28,000 mark for the first time in more than seven years on Monday.
The sell-off was largely in the insurance, securities and banking sectors; Citic Securities closed down 0.5 percent in Shanghai and 4.5 percent in Hong Kong. Bank of China tanked 1 and 2.6 percent, respectively.
Recent top performers such as Hong Kong Exchanges and Clearing lost nearly 4 percent, but Daniel So, strategist at CMB International Securities, says the pullback won't be "too deep."
"I believe the stock will outperform the market. Even if there is a pullback, investors will like to buy on dips so the pullback won't be too deep," So told CNBC.
To be sure, analysts expect the Hang Seng index to charge higher, with various brokerages raising their long-term targets. Bocom International Holdings expects the bourse to hit a record 32,000 by June, a 14 percent upside from current levels, while Morgan Stanley raised its 12-month target to 30,000.
"It's a volatile market, but the key thing that we are focusing on is that we are still well below the long-term average of Hang Seng valuations," Jonathan Garner, managing director & chief Asia and emerging market equity strategist at Morgan Stanley. "The 30,000-point target assumes we get back to 13 times forward P/E, which the rest of Asia is trading already, and so that's quite likely."