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Asian stocks close lower, China bucks trend

Yoshikazu Tsuno | AFP | Getty Images

Asian equities closed mostly lower on Monday, as investors remain focused on the mid-week decision from the U.S. Federal Reserve. The Chinese market bucked the trend and closed up, boosted by upticks in shares of brokerages and banks.

Kathy Matsui, managing director and chief Japan strategist at Goldman Sachs Japan told CNBC's "Asia Squawk Box" that it was not much of a surprise.

"We have a continued slide in the price of oil, so many people think this might reflect a weak global demand, coupled with the prospect that the Fed may start to raise interest rates later this week," said Matsui. "So people are quite cautious, especially going into the year end when nobody wants to take a lot of risks."

Energy stocks plunge

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Name
Price
 
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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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Oil prices saw no respite in Asian trade.

The West Texas Intermediate (WTI) oil futures, traded in the U.S., dropped 15 cents, or 0.42 percent, to $35.47 a barrel in Asian trade, while globally traded Brent crude futures fell 18 cents, or 0.5 percent, to $37.75 a barrel.

On Friday, the International Energy Agency (IEA) warned that global oversupply of crude could worsen next year as OPEC continues to pump out more oil.

Oil plays also saw sharp declines in their stocks. In Australia, shares of Santos closed down 4.84 percent, Oil Search fell 5.48 percent, and Woodside Petroleum shed 2.33 percent. In Hong Kong, Cnooc shed 1.26 percent and Sinopec fell 1.59 percent.

Japan's Inpex lost 2.92 percent and Japan Petroleum was down 1.67 percent.

Chinese market in the green, brokerages rally

Chinese markets erased early losses and closed in positive territory, with the Shanghai Composite index up 87 points, or 2.52 percent, at 3,521. The smaller Shenzhen Composite was up 44 points, or 2 percent, at 2,239.

Investors may have gained some confidence after the China Foreign Exchange Trade System (CFETS), an unit of the People's Bank of China (PBOC), said the yuan can remain stable in medium to long term.

Financial shares traded in positive territory in the afternoon, offsetting declines in other sectors, with brokerages up 7.45-10.02 percent, while banking stocks tacked on 1.24-3.26 percent.

Dickie Wong, executive director at Kingston Securities, said the rally was likely a bounce back after sector shares recently saw losses after several brokerage executives went missing.

Reports emerged on Sunday that Fosun Group's missing chairman, Guo Guangchang, was released from police custody. The company said he was in Shanghai to assist with an investigation.

Companies in which Fosun Group owns majority shares resumed trading on Monday with losses. Shares of Fosun International, which trades on the Hong Kong stock exchange, were down 9.15 percent, while Fosun Pharmaceutical was down 3.77 percent on the Shanghai exchange and down 10.04 percent in Hong Kong trade.

The yuan traded nearly flat at 6.4586 against the dollar.

On Friday, the PBOC announced it would no longer peg the yuan to the greenback. Instead, it introduced a basket of 13 weighted currencies, including a combination of G3 and Asian currencies. The PBOC did not announce a date for implementation.

Chinese property developers were also in the green after the latest data from the National Bureau of Statistics showed housing sales were up 18 percent in value between January and November. Reuters reported that real estate investment, however, slowed to 1.3 percent in the same time period.

Japan, South Korea markets stay in the red

The Japan and South Korea markets closed in negative territory amid the regional selloff.

The Nikkei 225 benchmark ended 347 points, or 1.8 percent, lower at 18,883, and the Topix closed down 22 points, or 1.4 percent, at 1,527 despite a better-than-expected quarterly Tankan Survey, a broad measure of business sentiment, released by the Bank of Japan before the market open.

The headline index for big manufacturers' sentiment was at plus 12 points in December, unchanged from the previous quarter. For large non-manufacturers, sentiment was up 2 points to plus 25 for the same period.

Izumi Devalier, an economist at HSBC Global Research, said in a note the report shows the mood, despite a better-than-expected reading, remains fragile. "The three-month-ahead outlook index for manufacturing surprised on the downside, falling to +7 from +10 in September. Sentiment has turned particularly cautious in iron & steel, where a global supply glut has eroded pricing power."

"We are also concerned about the deterioration in the outlook among motor vehicle manufacturers, given the industry's importance for Japan's economy," Devalier added.

Exporter stocks, such as Toyota, Honda and Sony, were all down, falling between 0.82 and 2.9 percent. Heavyweights such as Fast Retailing and Fanuc were down 3.09 and 2.79 percent respectively.

In Korea, the Seoul Kospi closed 21 points, or 1.07 percent, lower at 1,928.

Blue chip stocks fell, with Samsung Electronics closing down 1.79 percent, steel manufacturer Posco falling 3.24 percent, and KB Financial Group shedding 1.01 percent.

Shares in Hyundai Motor and Kia Motors finished up 1.35 and 2.68 percent respectively, after local media Yonhap reported the two firms are aiming for higher auto sales in 2016.

ASX 200 slips below 5,000

The Australian market lost ground on the back of low commodity prices, with bank and resources plays firmly in the red. The main ASX 200 index closed down 100 points, or 2.01 percent, at 4,928 with energy and materials sectors down 3.27 and 2.16 percent respectively.

Shares in ANZ, Commonwealth Bank, Westpac, and NAB, Australia's four largest banks, were down between 1.91 and 2.57 percent.

Two of the country's largest miners, Rio Tinto and BHP Billiton, were also down 2.04 and 3.49 percent respectively.

Iron ore producers saw heavy losses in morning trade as the metal's price dropped to $37 a tonne, down some 46 percent for the year. Shares of Fortescue Metals were down 2.45 percent, Atlas Iron shed 6.25 percent and BC Iron lost 17.24 percent.

The Australian dollar traded higher at 0.7199 against the U.S. dollar.

Over in the U.S.

U.S. equity markets finished Friday lower. The Dow Jones Industrial Average was down 309.54 points, or 1.76 percent, at 17,265. The S&P 500 was down 40 points, or 1.94 percent, at 2,012 while the Nasdaq fell 111.7 points, or 2.21 percent, to 4,933.

On the data front, investors will be focused on the mid-week U.S. monetary policy decision from the Federal Open Market Committee's meeting.

Elsewhere, Russian Prime Minister Dmitry Medvedev will start three-day state visit to China, as the countries look to strengthen their ties.

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