Asian stocks finished in negative territory on Monday even as China's central bank lowered the reserve requirement ratio (RRR) for all banks by 100 basis points over the weekend.
The wider-than-expected cut on Sunday was the People's Bank of China's (PBoC) second reduction in two months as the world's second-largest economy combat slowing growth. The move to spur bank lending was also a "calming act" following a sharp selloff in stock futures and global equities on Friday when authorities announced a crackdown on over-the-counter margin trading and that it would allow fund mangers to lend shares to short sellers.
"The RRR cut attempted to put a calm on markets after Friday's news, but the magnitude of the cut was more than what the market priced in," Catherine Yeung, investment director at Fidelity Worldwide Investment, told CNBC Asia's "Squawk Box."
Some analysts say declines offshore sapped risk appetite in Asia on Monday. "What happened in the U.S. and Europe on Friday awakened people that this could be the start of a correction," Sani Hamid, director of Wealth Management, Economy & Market Strategy at Financial Alliance, told CNBC's "Capital Connection."
"Markets have been running strongly for the past weeks and people have been waiting for this 5-10 percent correction, which is long overdue," he added.
Major U.S. indices finished sharply lower at the end of last week as investors shunned risk amid new trading regulations in China, renewed worries about Greece's cash crunch, while looking ahead to a heavy week of earnings.
The major indices had their worst week since the one ended March 27, closing down about one percent for the week. On Friday, the Dow Jones Industrial Average and Nasdaq Composite closed down 1.5 percent, respectively, while the S&P 500 index finished 1.1 percent lower.