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Shanghai brushes off PBOC easing to close down 1.3%

China's highly-volatile Shanghai Composite index finished in negative turf late Wednesday, underperforming most of Asia's stock markets, as investor confidence remained frail despite fresh monetary stimulus.

The People's Bank of China (PBOC) fired a double-barreled easing shot late Tuesday—lowering interest rates by 25 basis points and the reserve requirement ratio (RRR) for most big banks by 50 basis points.

This followed a brutal multi-day sell-off in its domestic equity markets that has sent shockwaves around the world. China will also restrict trading in stock index futures, a statement from the China Financial Futures Exchange said, as regulators step up their efforts on curbing speculation.

However, there are analysts who feel that more aggressive action may be needed to prop up the slowing economy and shore up share prices.

"Clearly a cut [in] the interest rate and RRR is helpful, but [with] people still overly concerned about the economy, this relaxation in monetary policy may be coming in a bit too late because the sentiment is worsening," Pu Yonghao, partner and CIO at Fountainhead Partners, told CNBC. "On top of that, we are seeing massive capital outflow which is shrinking the capital base so cutting RRR is just a way to offset the money that left China, but the money injected into the system is less than market expectations," he added.

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The rollercoaster ride in many Asian bourses on Wednesday also tracked the dramatic trading session on Wall Street overnight. The blue-chip Dow Jones Industrial Average and S&P 500 finished about 1.3 percent lower after rallying near 3 percent earlier, marking their biggest reversal to the downside since October 2008. The S&P 500 remained in correction territory.

Meanwhile, the tech-heavy Nasdaq Composite closed down 0.4 percent.

Symbol
Name
Price
 
Change
%Change
NIKKEI
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HSI
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ASX 200
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SHANGHAI
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KOSPI
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CNBC 100
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Mainland indices extend losses

In yet another notoriously choppy session, China's benchmark Shanghai Composite turned sharply lower in the final 10 minutes of trading to close down 1.3 percent at 2,926.3.

After plummeting to an intra-day low of 2,850.7, the key index surged more than 3 percent at the start of the afternoon trading session to reclaim the critical 3,000 mark, before quickly paring gains.

"Retail investors have been very jittery [earlier in the day] as they thought markets will rebound but they did not. So they started to sell. I think at the moment, Chinese retail investors remain nervous and very confused," Wong Kok Hoi, MD & CIO at APS Asset Management, told CNBC's "Capital Connection."

Among China's other indexes, the blue-chip CSI300 index and the smaller Shenzhen Composite ended 0.6 and 3.0 percent lower, respectively. Meanwhile, Hong Kong's Hang Seng index erased gains to drop 0.8 percent.

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Chinese brokerages were in focus following reports of investigations by regulatory authorities. The likes of Citic Securities, Haitong Securities and China Merchants Securities gave up earlier advances to close down, tracking the moves in the broader market.

Citic Securities fell 3.3 percent in Hong Kong, while its Shanghai-listed A-shares lost 2.7 percent. Haitong Securities dropped 0.9 and 1.1 percent, respectively, in Shanghai and Hong Kong.

Nikkei jumps 3.2%

Japan's Nikkei 225 index scaled higher in late trading to break a six-session losing streak, helped by accelerated gains in mainland shares.

Earlier in the day, the Tokyo bourse moved in and out of negative territory, extending the extreme bouts of volatility seen in the previous session where the Nikkei index at the Tokyo Stock Exchange made a U-turn late in the final hour of trading to end at a six-month trough.

Advances among beaten-down exporters underpinned the rise, which according to Reuters, is the index's biggest daily gain since October 31. Panasonic topped the leaderboard by soaring 6.3 percent, while Nissan and Suzuki Motor elevated more than 5 percent each.

However, counters with significant exposure to China remained on the back foot. Construction equipment makers Komatsu and Hitachi Construction Machinery Co. receded 1.9 and 0.3 percent, respectively.

Read MoreWhy a Fed delay won't stop Asia's stock slide

ASX gains 0.7%

Australia's S&P ASX 200 ended Wednesday's rocky session in the black, after early-trade laggards such as banks and resources plays staged a comeback.

Australia and New Zealand Banking ticked up 0.3 percent, while shares of Westpac and Commonwealth Bank of Australia closed up more than 1 percent each. Telecommunications giant Telstra, which traded ex-dividend this week, also erased sharp falls hit in the morning session to end 0.5 percent higher.

Meanwhile, shares of BHP Billiton widened gains to 2.6 percent despite missing analyst expectations to post a 86 percent fall in profit late Tuesday, in face of a painful commodity price rout. According to Scott Phillips, advisor from The Motley Fool, investors were relieved that the miner's results weren't as bad as initially thought.

Health-related counters fell after posting disappointing earnings. Primary Health Care and Healthscope skidded 3.8 and 1.6 percent, respectively.

Kospi rises 2.6%

South Korea's Kospi index shrugged off a lackluster open to close up more than 2 percent, posting its biggest one-day gain in two years, as investors cheered fresh easing measures in China — the country's biggest trade partner.

Hyundai Motor and Kia Motors continued to receive hefty buy orders, up 1.7 and 2.6 percent respectively. LG Electronics surged 6.4 percent on the back of bargain hunting and expectations of improved earnings in the TV manufacturing industry.

Sentiment was also supported by comments from the country's finance minister Choi Kyung-hwan, who said early Wednesday that the local stock market is moving "excessively" in line with Chinese shares and the government will strengthen its monitoring of financial markets.

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Rest of Asia

Indian shares were one of the underperformers in the region, with the BSE Sensex index closing 1.22 percent lower.

Malaysia's FTSE Bursa Malaysia KLCI index closed 1.05 percent higher, while the ringgit moved off 17-year lows against the U.S. dollar, as the sense of relief in the region offset escalating fears over sovereign wealth fund 1Malaysia Development Berhad (1MDB).

According to a report by Singapore's Business Times on Wednesday, Abu Dhabi's International Petroleum Investment Co (IPIC) is reportedly considering exiting a plan to help restructure 1MDB's debts.

Correction: This article has been updated to reflect that the People's Bank of China lowered interest rates by 25 basis points and the reserve requirement ratio by 50 basis points for most big banks on Tuesday.