Asian bourses drift as IPOs roil China stocks

Asian stocks drifted on Tuesday, reversing earlier gains, with China stocks taking fright as new share issues raised the prospect of a sell-off.

Hong Kong's main index slid 1.0 percent by mid-session, tracking China stocks which fell as the new issues raised the prospect of funds being diverted from existing equities, dealers said. The benchmark Shanghai Composite Index dropped 1.84 percent at the break.

"Today and tomorrow will be the peak for the latest round of IPOs so people may be selling down their holdings from the secondary market to use the money for IPO subscription," Steven Leung, Hong Kong-based director of institutional sales at UOB Kay Hian, told Bloomberg News.

The Shanghai Composite has recorded an astonishing 118 percent gain over the past year, on expectations of further monetary easing in China.

Australia's benchmark S&P/ASX200 closed flat at 5,826.5, dropping 1.0 point or 0.02 percent, giving up earlier gains as bank stocks mostly drifted lower after the central bank cut interest rates to an historic low of 2.0 percent.
Tokyo and Seoul were closed for holidays, but early trade elsewhere in Asia had been energised by Wall Street, which put in a strong performance Monday on news of the first rise in US factory orders in eight months.

The Dow gained 46.34 points or 0.26 percent to 18,070.40 after the Commerce Department said new orders for manufactured goods rose 2.1 percent in March, after seven straight months of declines.

The Australian bourse gyrated around the central bank's rate decision to cut official rates to a record 2 percent from 2.25 percent, as it tries to tamp down the Aussie dollar and stoke economic growth to offset a downturn in the key mining sector.

"At today's meeting, the board judged that the inflation outlook provided the opportunity for monetary policy to be eased further, so as to reinforce recent encouraging trends in household demand," Reserve Bank of Australia governor Glenn Stevens said in a statement.

Stevens said the Australian dollar, which has lost ground amid plunging commodity prices, needed to fall further.
"Further depreciation seems both likely and necessary, particularly given the significant declines in key commodity prices," he said.

The local unit eased to 77.88 US cents immediately after the decision but jumped back to over 79 US cents.

Analysts said the sharp rise reflected the market's disappointment that the central bank did not include an easing bias in its statement, which could have pointed to further rate cuts.

The greenback was up against the euro and most other major Asian currencies in afternoon Asian trade on fresh expectations the US central bank may raise interest rates in the second half of the year, analysts said.

The euro bought $1.1132, down from $1.1146 in New York late Monday. The greenback however eased to 120.09 yen from 120.14 yen.

Against the Japanese currency, the euro was changing hands at 133.68 yen from 133.92, but trade was thin with Tokyo markets closed.

Volumes were also thin in oil, with prices edging lower Tuesday as concerns over a global supply glut persisted and few fresh leads emerged for dealers to track.

US benchmark West Texas Intermediate for June delivery fell 12 cents to $58.81 while Brent crude for June eased 18 cents to $66.27 in afternoon trade.

"Oil prices are drifting with low volumes, indicating dealers across the Asia-Pacific region are sitting back with no major developments at the moment," Michael McCarthy, chief market analyst at CMC Markets in Sydney, told AFP.

Gold fetched 1,188.70 against $1,182.38 late Monday.

Thailand was also closed for a holiday. In other markets:

-- Taiwan's weighted index fell 24.91 points, or 0.25 percent to 9,820.13.

Taiwan Semiconductor Manufacturing Co closed 0.34 percent lower to Tw$147.0, while Fubon Financial Holding lost 1.03 percent to Tw$67.5.

-- In Wellington, the benchmark NZX 50 index rose 20.71 points or 0.36 percent, to 5,787.79. Air New Zealand lifted 3.93 percent to NZ$2.78 and Chorus was up 0.66 percent at NZ$3.07.