Asian equity markets mostly erased early gains to end in negative territory on Tuesday, on the back of unexpected news that the People's Bank of China (PBOC) is implementing a one-time depreciation of nearly 2 percent to its currency.
Earlier in the day, most stock indices in the region were up following a positive lead from Wall Street overnight. The Dow Jones Industrial Average broke a seven-day losing streak, as a recovery in oil prices and news that Warren Buffett's Berkshire Hathaway agreed to buy aerospace and energy equipment maker Precision Castparts boosted investor sentiment.
In other news, Greece and its lenders have reached a deal on the indebted country's fiscal targets, which will see Greece aiming for a surplus from 2016, according to a Reuters report.
Mainland stocks mixed
China's Shanghai Composite index finished flat at 3,928, after meandering between gains and losses, following the central bank's surprise decision to sharply weaken the , which was last seen 1.8 percent lower at 6.3244 against the dollar. The Shanghai bourse remained just a whisker below the key psychological mark of 4,000.
The blue-chip CSI300 index inched down 0.4 percent, while the smaller Shenzhen Composite advanced 0.4 percent after a day of choppy trade.
Airline stocks were among the biggest laggards on Tuesday, on the back of concerns that a weaker yuan could increase the borrowing costs and the fuel bills of Chinese carriers. China Eastern Airlines and China Southern Airlines closed down 7.4 and 6.8 percent, respectively, while Air China lost 5.6 percent.
Outperforming the rangebound trade across the country, Shenzhen-listed Suning Commerce Group rose by the daily maximum allowable of 10 percent after e-commerce giant Alibaba announced a $4.63 billion investment into the bricks-and-mortar electronics retailer.
Meanwhile, the ruling Communist Party has begun looking for an eventual , Reuters reported on Monday citing sources with ties to the leadership.
Kospi drops 0.8%
South Korea's Kospi index ended at a fresh four-and-a-half-week low, after rising as much as 1 percent earlier in the session. The also turned weaker to hover around a three-year trough following news out of China.
Affiliates of Lotte Group are in focus as Shin Dong-bin, chairman of Lotte Group and co-CEO of Lotte Holdings, offered a second apology on Tuesday, in a bid to curb growing criticism of the retail group.
Lotte Chemical and Lotte Insurance closed up 3.1 and 2.4 percent, respectively, while Lotte Shopping surged nearly 10 percent. The latter was also bolstered by fresh data which showed combined sales at department stores rose 0.9 percent last month from a year earlier.
ASX sags 0.7%
Australia's S&P ASX 200 index erased early gains to finish in the red, with lenders and retailers leading the way down.
National Australia Bank was the biggest loser with a drop of 2.6 percent, while Westpac and Australia and New Zealand Banking receded more than 1 percent each. Retailers such as JB Hi-Fi and Harvey Norman fell 7.3 and 3.1 percent, respectively, on profit-taking following Monday's surge.
Fortunately, gains in the resources sector helped to limit downside in the bourse. Market bellwether BHP Billiton and Rio Tinto advanced more than 1 percent each, while gold producers Evolution Mining gained 5.8 percent after signing an agreement with Edna Berly Mining.
On the domestic data front, business confidence in the country eased last month, according to a survey done by National Australia bank. as mining and construction firms turned more cautious.
Nikkei sheds 0.4%
Japan's index got off lightly in comparison to its regional peers. Pulling back from an intra-day high of 20,931 points, the Tokyo bourse turned negative by late-morning trade and eventually finished nearly half a percent lower.
Stocks with exposure to China proved resilient to the region-wide downbeat sentiment; Mitsubishi Materials Corp. and Sumitomo Metal Mining climbed more than 3 percent each, while Komatsu advanced 1.9 percent.
Steelmakers also attracted hefty buy orders; Nisshin Steel closed up 4.6 percent, while Japan Steelworks and JFE Holdings rose more than 3 percent each.
Precision machinery maker Screen Holdings pared gains to close down 1.5 percent, despite announcing a 47.3 percent rise in April-June operating profit.
Southeast Asia eyed
The news of a sharp depreciation in the yuan battered most financial markets in Southeast Asia on Tuesday.
Malaysia's benchmark FTSE Bursa Malaysia KLCI index shaved off 1 percent to touch its lowest since April 2013, while Indonesia's Jakarta Composite plunged 2.1 percent to a one-and-half-year trough. Shares in Thailand and Vietnam escaped the selloff with marginal losses, while Philippine's PSE Composite index notched up 0.5 percent after data showed exports fell 3.3 percent in June, narrowing from May's 17.4 percent decline.
Reopening after an extended weekend, Singapore's benchmark Straits Times index slumped 1.2 percent to a near one-week low, as data showed the country's final gross domestic product (GDP) contracted 4.0 percent on-quarter in the April-June period.
Meanwhile, commodity trader Noble Group narrowed gains to nearly 1 percent late Tuesday, after rallying nearly 9 percent earlier in the session on the back of a review into its accounting and management practices commissioned from PwC, which concluded that the way the company recorded profits on long-term sales and marketing deals was consistent with industry practice.
In the currency space, the Singapore dollar hit a five-year low of 1.3999 per U.S. dollar, while Malaysia's ringgit and Indonesia's rupiah touched lows last seen during the Asian financial crisis in 1998. The Philippine peso, meanwhile, eased 0.3 percent to 45.930 against the greenback - hitting its lowest since July 2010.