By V. PHANI KUMAR in Hong Kong and SHRI NAVARATNAM and LESLIE SHAFFER in Singapore
Most Asian stocks fell Wednesday as concerns that the U.S. quantitative easing might not be as large as expected triggered a rebound in the U.S. dollar and hurt commodities.
Hong Kong's Hang Seng Index dropped 1.9% to close at 23164.58, China's Shanghai Composite gave up 1.5% to finish at 2997.05, Australia's S&P/ASX 200 fell 0.9% to 4648.14, and India's Sensex lost 1.1% to 20005.37. The benchmark indexes in Thailand and Singapore each fell 1.2%, with the SET index closing at 983.96 and the Straits Times Index ending at 3124.38.
Japan's Nikkei Stock Average climbed 0.1% to 9387.03 after a volatile session, as some exporters advanced on the dollar's gains against the yen.
While commodity shares declined across the region, the effect was pronounced in Hong Kong, where PetroChina lost 4.3% and Cnooc dropped 2.5%, while China Petroleum & Chemical Corp., or Sinopec, shed 3.4%.
"Crude oil fell, so oil stocks dropped sharply, dragging the resources sector and triggering a sell-off from institutions. Everybody is selling," said Francis Lun, general manager at Fulbright Securities in Hong Kong. However, the fall in Hong Kong was largely because of "profit-taking" as the market was overbought following strong gains over the last few months, Mr. Lun said.
In Shanghai, Sinopec fell 1.4% and PetroChina dropped 2.1%, Jiangxi Copper shed 3.8% and Shandong Gold-Mining lost 3.9%. Elsewhere in the region, Rio Tinto slid 2% and Newcrest Mining shed 3.1% in Sydney, and Korea Zinc lost 3.2% in Seoul.
The sharp fall across asset classes came amid a rebound in the dollar after The Wall Street Journal reported that the U.S. Federal Reserve was likely to unveil a program of Treasury purchases worth a few hundred billion dollars over several months, in contrast to purchases of nearly $2 trillion it unveiled during the financial crisis.
"Given the many numbers and timeframes that have been floated in the market (anywhere from $250 billion per quarter to about $750 billion to $2 trillion in all) the WSJ story only served to underscore the uncertainty surrounding next week's Federal Open Market Committee [meeting], prompting the squaring of stale [U.S. dollar] shorts," said Sue Trinh, a senior currency strategist at Royal Bank of Canada in emailed comments.
At its Nov. 3 meeting, the FOMC is widely expected to announce further quantitative-easing measures to revive a slowing U.S. economy.
Australian shares lost ground after a sharp fall in the Australian dollar, spurred by weaker-than-expected inflation data for the third quarter, which shut the door on a potential rate increase by the central bank next week.
Shares were also weighed as futures resumed trading after ASX's bond futures trading platform crashed, halting trades for just over 90 minutes and preventing traders from executing deals after the inflation data.
In addition to the fall in resource stocks, the Sydney market was also dragged by a 3.5% drop in ASX shares. The decline was on top of the 7.4% slide Tuesday, on concerns the takeover bid by the Singapore Exchange could be scuttled by regulatory and political hurdles in Australia.
Defying the trend, National Australian Bank rose 2.1% after the company said Tuesday that full-year net profit rose by a more-than-expected 63% from a year earlier, helped by a decline in charges for problem loans as the Australian economy picked up momentum.
In Tokyo, Honda Motor rose 1.9% and Sharp rose 1.8% on the weakened yen. Banks also lost ground as some sold their cross-shareholdings, with Mitsubishi UFJ Financial Group sliding 1.8%.
Industrial robot maker Fanuc added 1% after reporting a net profit for April through September that beat forecasts. Fuji Heavy Industries rose 5.3% after the company raised its first-half net profit outlook.
In Singapore, China XinRen Aluminum rose nearly 16% on its debut, benefiting from its position as one of the few stocks on the Singapore exchange to offer exposure to China's robust appetite for metals.