(MENAFN- Gulf Times) Asian shares tumbled yesterday as investors fretted over the impact which a second cut in China's currency in as many days will have on economies closely tied to the Asian giant.
The dollar declined slightly in Tokyo trade, after rising on news the People's Bank of China (PBoC) had again reduced the value of the yuan against the greenback.
Hong Kong lost 2.38%, or 582.19 points, to end at 23,916.02, while
Shanghai dropped 1.06%, or 41.59 points, to 3,886.32 while the
Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 1.54%, or 35.09 points, to 2,249.18.
Other regional markets also lost ground, with Tokyo closing down 1.58%, or 327.98 points, at 20,392.77, while Sydney ended 1.66% lower at 5,382.10. Seoul ended 0.56%, or 11.8 points, lower at 1,975.47.
In other markets, Singapore closed down 2.90%, or 91.57 points, to 3,061.49; agribusiness company Wilmar International eased 1.30% to Sg$3.03 while real estate developer Capitaland fell 4.69% to Sg$3.05.
Kuala Lumpur fell 1.64%, or 26.78 points, to close on 1,609.93; Sime Darby fell 1.47% to 8.04 ringgit, Malaysian Banking fell 1.29% to 8.41 ringgit, and Petronas Gas lost 0.46%, ending at 21.48 ringgit.
Jakarta ended down 3.10%, or 143.10 points, at 4,479.49; Bank Mega gained 7.41% to 2,900 rupiah while textile and garment company Sri Rejeki Isman fell 13.43% to 303 rupiah.
Wellington fell 1.12%, or 65.14 points, to 5,757.21; Spark New Zealand was 2.46% off at NZ$2.77 while Fletcher Building closed 2.05% down at NZ$7.64
Taipei fell 1.32%, or 110.76 points, to 8,283.38; Taiwan Semiconductor Manufacturing Co dropped 1.53% to Tw$128.50 while Hon Hai Precision Industry lost 2.26% to Tw$86.50.
Manila lost 0.99%, or 75.02 points, to 7,495.43; top-traded Semirara Mining and Power rose 1.96% to 130 pesos, but BDO Unibank lost 1.92% to 102 pesos and Manila Electric fell 2.09% to 300 pesos.
Bangkok was closed for a public holiday. Beijing's surprise devaluation of the yuan on Tuesday sent ripples through global financial markets and prompted a rout on Asia-Pacific currencies over concerns it could hurt other economies in the region. The second yuan cut yesterday brings the reductions this week to 3.5%-the largest in more than two decades-in a move widely seen as designed to boost China's flagging economy.
Concerns about China's stalling growth were compounded on Wednesday when three key indicators-industrial production, retail sales and fixed asset investment-all came in below market expectations.
"Today's weak fixing indicates the PBOC wants to see further depreciation in the yuan, as yesterday's drop won't be enough to prop up China's exports," Kenix Lai, a foreign-exchange analyst at Bank of East Asia in Hong Kong, told Bloomberg News.
"Capital will flee from China to the US due to the economic slowdown and the yuan devaluation."
Wall Street tumbled Tuesday on the initial devaluation, with the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite Index all closing down around one% or more. In Tokyo share trading yesterday, automaker Toyota fell 1.66% to ¥7,987, while Nissan, also dependent on China for sales, dropped 2.09% to ¥1,168.5.
Airlines lost ground in Shanghai on worries that a weaker yuan will raise the cost of servicing US dollar-debt. Air China fell 5.04% to 10.92 yuan and Hainan Airlines dipped 3.28% to 5.30 yuan. In Hong Kong, development stocks also took a hit from debt concerns, with China Resources Land dropping 7.92% to HK$19.80 and China Overseas Land & Investment giving up 8.51% to HK$23.10.
Commodities also lost ground on concerns that demand is set to fall in Asia's biggest economy-a major importer of energy, metals and grains-with oil sinking to a six-year low.
Oil prices came under further pressure from news the Opec raised output in June, adding to a global supply glut.
US benchmark West Texas Intermediate for delivery in September fell to $42.99 a barrel yesterday, after hitting $43.08 in New York-the lowest level since March 2009.
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