Asia Markets

Asian shares fall as China trade data fuel growth woes

A share price board at the stock exchange in Sydney.
Peter Parks | AFP | Getty Images

Asian shares outside China slid deeper into the red on Tuesday, with resources names leading losses after latest trade figures rekindled concerns over demand from the world's second-biggest economy.

Commodity currencies also took a hit, with the Australian dollar and the New Zealand dollar furthering their declines after the data release.

China's dollar-denominated exports fell 3.7 percent in September from a year earlier, while imports plunged 20.4 percent to chalk up their eleventh consecutive month of decline, official data showed on Tuesday.

That produced a trade surplus of $60.34 billion for the month.

"Chinese exports were better-than-expected and imports were slightly worse, but both continued to decline in year-on-year terms. It was basically a fairly mixed report, but with last week's impressive rally starting to look stretched, mixed Chinese data was taken as bad Chinese data," IG's market analyst Angus Nicholson wrote in a report issued late Tuesday.

Standard Chartered's Callum Henderson agrees, noting that the wider-than-expected slump in imports translates into "very bad news" for emerging markets.

"Import numbers are very bad news for countries exporting to China and that's focused on emerging markets in Asia and Latin America,"the global head of FX research at Standard Chartered told CNBC.

Mainland markets choppy

China's share markets largely recouped earlier losses, with the Shanghai Composite index turning positive in late-day trading to close up 0.2 percent.

Airlines were among the day's gainers, thanks to a boost from lower oil prices. China Eastern Airlines and China Southern Airlines soared 2.5 and 1.1 percent respectively.

Dongfeng Auto surged by the daily maximum allowable of 10 percent after the China Association of Automobile Manufacturers said on Tuesday that vehicle sales in China are expected to grow by around 3 percent in 2015 on the back of government policies.

However, banking shares such as Bank of China and China Construction Bank sagged 0.8 and 0.6 percent respectively, after brokerage CLSA estimated that Chinese banks' bad loan ration could be as high as 8.1 percent, significantly higher than the official 1.5 percent.

Among China's other indexes, the benchmark CSI300 Index edged down 0.1 percent, while small-caps continued to outperform with the Shenzhen Composite erasing earlier losses to close up 1.1 percent.

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In the previous session, the Shanghai bourse rocketed up 3.3 percent to finish at its highest level since August 24, thanks to a report by the China Securities Journal that quoted a senior central banker saying that the country's stock market correction is "almost over."

Investor sentiment also got a boost from news that the central bank expanded a pilot scheme that allows banks to borrow money using high quality credit assets as collateral.

A note from DBS Group Research likens the program to Beijing's fiscal policy arrangements.

"First, the stimulative effects of this program would be targeted, because the [People's Bank of China] has control over who to lend to and how much to lend. This is consistent with PBoC's earlier 'targeted' RRR cuts, as well as targeted easing on the fiscal front [such as] stimulus that centers on urbanization projects and shanty town renovation.

Second, the loan application process would give the PBoC access to detailed information on banks' asset quality and lending practices, helping it better assess credit risks. In the same light, local government bond issuance requires detailed disclosure of local governments' financial information, allowing the central government and the public to better gauge the health of local government finances.

Third, the collateralized loan program would shift some risk from the banking system to the central bank," the report said.

Meanwhile, Hong Kong's Hang Seng Index turned negative yet again, down 0.5 percent. Chinese oil giants Sinopec and PetroChina fell nearly 2 percent each after state media reported that China plans to cut city-gate non-residential natural gas prices by up to 30 percent in some provinces at the end of October.

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Nikkei sags 1.1%

Japan's benchmark Nikkei 225 index was the victim of profit-taking after an extended weekend, with oil-related counters among the hardest-hit after a more than 5 percent tumble in crude oil prices overnight.

Inpex plummeted nearly 4 percent, while JX Holdings and Idemitsu Kosan lost more than 1 percent each.

Index heavyweights also weighed on the Tokyo bourse, as Fast Retailing, SoftBank and Fanuc fell more than 3 percent each.

Shares of Rakuten closed down 3.3 percent after the e-commerce giant said it is investing in Madrid-based taxi-booking app Cabify.

By contrast, Sharp leaped 6.5 percent following news that government-backed fund Innovation Network Corporation of Japan (INCJ) is considering a range of options to help the troubled Japanese electronics maker.

Meanwhile, the Bank of Japan (BOJ) released minutes from its recent policy meeting where it maintained its pledge to increase base money at an annual pace of 80 trillion yen ($666 billion).

In an interview with CNBC after the BOJ meeting, Governor Haruhiko Kuroda said Japan's inflation rate was in line with the central bank's expectations, indicating that a fresh round of quantitative easing (QE) in the near term was unlikely. Kuroda was speaking on the sidelines of an International Monetary Fund (IMF) meeting in Peru.

Economic pain in Australia almost over?

ASX drops 0.6%

Australia's index logged its second straight session of losses, with the key resources sector coming under pressure.

Santos and Woodside Petroleum retreated 6.2 and 2.1 percent respectively, while BHP Billiton and Rio Tinto receded more than 2 percent each.

Telecommunications giant Telstra, which held an annual general meeting in Melbourne, fell 0.9 percent.

The latest National Australia Bank survey which showed a recovery in business confidence for September provided little comfort for investors. The main business confidence index jumped to 5 points last month, from 1 point in August which was the index's lowest level since mid-2013.

In other news, the Reserve Bank of Australia Deputy Governor Philip Lowe said Australia needed to avoid allowing uncertainty about the future to "mutate into chronic pessimism," Reuters reported. Lowe added that monetary policy alone could not boost living standards.

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Kospi slips 0.1%

South Korea's Kospi index finished a whisker below the flatline, after turning negative at the end of the morning trading session.

Energy shares tracked the region-wide sell-off, with SK Innovation and S-Oil plunging 1.3 and 0.9 percent respectively.

Blue chips such as Samsung Electronics and Posco eased 0.6 and 0.3 percent respectively, but Hyundai Motor recovered Monday's losses with a 2.5 percent rally. Sister firm Kia Motors also outperformed, up 3.7 percent.

Meanwhile, official data released on Tuesday showed foreign net outflows from both South Korea's stock and bond markets for the fourth month in a row in September, as offshore investors adjusted their portfolios ahead of an expected U.S. rate hike.

Foreign investors lowered their bond holdings by a net 937.0 billion ($820.27 million) in September, Reuters reported citing figures from the Financial Supervisory Service, up sharply from 216.0 billion won in August.

Overnight on Wall Street, major U.S. averages advanced slightly as gains in utility counters offset a retreat in energy plays and nerves surrounding the release of third-quarter corporate earnings results.

— CNBC's Ansuya Harjani contributed to this report