Mainland markets down
China's benchmark Shanghai Composite index ended down 0.15 percent as investors expressed "modest disappointment" following the exclusion from one of the world's major equity indexes. Also weighing on sentiment was a report on the website of the People's Bank of China, which stated that the central bank's economists have lowered their 2015 growth forecast for the country to 7.0 percent from 7.1 percent.
After slumping 1.8 percent at the start of trade, the Shanghai bourse slowly clawed back losses to nudge above the flatline in the afternoon session, but failed to hold on to gains.
Some analysts think Wednesday's pullback may be a temporary blip. "Retail consumers are not going to stop [to think] about what MSCI is doing. They will keep forging ahead," Daniel Wiener, CEO of Adviser Investments, told CNBC.
Chris Weston, IG's chief market strategist, feels that recent declines may spark further policy easing. "The prospect of a pullback remains elevated in the Chinese markets, but given real yields are on the rise, I think we can expect a cut in benchmark interest rate or banks' reserve ratio requirements within the coming weeks, which means pullbacks in the mainland markets should be supported," he wrote in a note.
Attention was also on the market's largest initial public offering (IPO) since 2011. China National Nuclear Power Corporation (CNNPC) rocketed 44 percent to 4.880 yuan in its market debut, compared to its issue price of 3.39 yuan. As the company is the first nuclear power firm to go public on the A-share market, CNNPC has been in the spotlight since submitting its IPO application to the government.
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On Wednesday, the blue-chip CSI 300 index shed 0.16 percent, while the smaller Shenzhen Composite outshine with a 2 percent jump.
In Hong Kong, the Hang Seng index reversed direction to nosedive more than 1 percent to a two-month low as traders liquidated long positions in big H-shares such as Bank of China and China Construction Bank on the back of the MSCI' decision.
Shares of Hong Kong-listed HSBC extended losses to drop 0.7 percent following the British lender's announcement on Tuesday to cut costs by as much as $5 billion within two years and lay off as many as 25,000 staff. But, Sunrise Brokers' Asian Equities head Ben Collett told CNBC that he still likes the stock: "In Hong Kong, we like HSBC. We had a short squeeze yesterday, but we don't see much downside from here."