Appetite for risk assets dampened across the region after the July reading for an index of China's services industry by HSBC Holdings Plc and Markit Economics came in at 50, the lowest since the series began in November 2005 and down from a 15-month high of 53.1 in June. A report over the weekend showed the government's non-manufacturing Purchasing Managers' Index fell to 54.2 in July from 55 in June. A reading above 50 indicates expansion.
The weakness in the China service industries headline number likely reflects the impact of the ongoing property slowdown in many cities as property related activity, such as agencies and residential services, see less business," said HSBC's China Chief economist Qu Hongbin. HSBC noted that "today's data points to the need of continued policy support to offset the drag from the property correction and consolidate the economic recovery."
Portugal's central bank took control of Banco Espirito Santo, easing concern that the lender's woes may spread. Espirito Santo will get 4.9 billion euros ($6.6 billion), the central bank said. Global financial markets were roiled last month after another holding company in the group missed payments on commercial paper.
Among Asian bourses
Nikkei declines 1%
Japanese share market closed down, registering fourth consecutive drop, due to yen's rise against major rivals and downbeat reading of China's services industries. Meanwhile, selloff pressure mounted on caution ahead of Bank of Japan policy meeting this week and more corporate earnings. The benchmark Nikkei 225 index dropped 154.19 points to close at 15320.31, while the Topix index fell 12.66 points to 1263.53.
Yamaha Motor Co. advanced 3.7% to 1783 yen after announcing its net profit increased 58% to 32 billion yen in the first half through June. The company also lifted its dividend plan to 29 yen per share from its previous plan of 26 yen per share for the fiscal year ending December.
Konami Corp. rose 0.7% to 2421 yen after its group net profit in the April-June quarter almost doubled to Y1.4 billion.
Isuzu Motors soared 3.2% to 731 yen after saying its first-quarter net income was 21.4 billion yen ($209 million), beating the mean analysts' estimate of 19.3 billion yen.
IHI Corp. dropped 2.9% to 473 yen after announcing its group net profit fell nearly 30% in the April-June quarter to 6.5 billion yen.
Australia stocks fall on China woes
Australian stock market closed down, extending falling streak for third consecutive session, with banks and miners leading losses and after some mixed profit reports. The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index both declined by 0.4% to 5518.60 and 5511.50, respectively.
The gold miners were biggest loser in the Sydney market today, following an 0.5% fall in the price of the precious metal overnight. Newcrest Mining slumped 1.5% to A$10.64, while Beadell Resources dropped 4.8% to A$0.495.
Materials and resources stocks closed lower, with resources giant BHP Billiton falling 0.8% to A$38.01, while rival Rio Tinto sank 0.2% to A$65.33. Fortescue Metals declined 0.8% to A$4.70.
Shares in engineering Group Downer EDI fell 4.2% to A$4.58 with traders focussed on its pessimistic outlook for the mining sector rather than a six% rise in profit.
Healthcare sector was top gainer in the market, adding 1.2%, led by Cochlear with gain of 10.3% to A$69 after an Australian maker of hearing implants reported better than expected full-year profit of A$93.7 million, compared with A$132.6 million a year earlier. Ramsay Health Care rose 1.3% to A$47.63 and CSL Group jumped 0.7% to A$63.59.
Shanghai Composite falls on weak service data
Mainland China stock market declined, as investors withdrew profit off the table after key indices escalated to highest level in 8-months on Monday. Meanwhile, profit booking pressure intensified after downbeat reading of China's services industry index for July by HSBC Holdings Plc and Markit Economics. The benchmark Shanghai Composite lost 0.15%, or 3.39 points, to close at 2219.95. Turnover increased to 141.47 billion yuan from yesterday's 140.08 billion yuan.
Shares of property developers declined the most in Shanghai after the nation's biggest-listed developer reported a drop in sales. China Vanke Co. slid 2.1% in Shenzhen after sales dropped to 13.3 billion yuan from 19.4 billion in June. Poly Real Estate Group Co. retreated 1.7%. Gemdale Corp. slumped 2.3%.
Chongqing Chuanyi Automation Co. jumped 44% in its first day of trading in Shanghai.
Hang Seng ends 0.2% up
Hong Kong share market closed higher in volatile trade, with gain led by financial stocks. But gain on the upside capped on downbeat China's services sector data for July. The benchmark Hang Seng Index added 48.18 points to close at 24600.08. Turnover increased to HK$70.85 billion from yesterday's HK$67.42 billion.
Shares of HK financial companies climbed, led by HSBC Holdings plc with gain of 1.8% to HK$83.55 after the Europe's biggest bank said its first-half pretax earnings fell 12% from a year earlier, while predicting a revenue rebound in 2015.
Hang Seng Bank slipped 1.4% to HK$129.60 after reporting lower first-half profit because of an accounting change and reduced gains from property valuations.
Mainland developers listed in HK bourse suffered heavy losses on profit booking. China Resources Land slid 3% to HK$17.32. China Overseas Land & Investment dropped 2.4% to HK$22.90. Wharf Holdings retreated 2.4% to HK$60.
Greentown China Holdings dropped 12.2% to HK$8.55 after the builder said it expects first-half profit will drop by more than 65% from a year earlier.
Sensex, Nifty slip in red as RBI maintains status quo
Indian stock market was lower in afternoon trade as the Reserve Bank of India kept policy rates unchanged at its policy meet today. At 13:40 IST, the 30-share index was at 25656.88, down 66.28 points or 0.26 per cent. The Nifty was at 7666.05, down 17.60 points or 0.23 per cent.
The Reserve Bank of India (RBI) after a policy review today, 5 August 2014, kept policy repo rate under the liquidity adjustment facility (LAF) unchanged at 8%. It also kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4% of net demand and time liabilities (NDTL) and reduced the statutory liquidity ratio (SLR) of scheduled commercial banks by 50 basis points from 22.5% to 22% of their NDTL with effect from the fortnight beginning 9 August 2014.
Markit Economics said today, 5 August 2014, adjusted for seasonal factors, the HSBC Services Business Activity Index stood at 52.2 in July, down from Junes 17-month peak of 54.4. The latest reading indicated a third successive monthly expansion and was consistent with a modest rise in business activity. The headline HSBC Composite Output Index posted 53 in July, down from Junes 16-month high of 53.8. The latest figure was indicative of a solid expansion in private sector activity, and was the second highest reading since February 2013.Output growth accelerated to a 17-month peak in the manufacturing sector, while activity rose for a third consecutive month at services companies.
The foreign institutional investors were net buyers of Indian stocks worth Rs 372.56 crore and domestic institutional investors were net sellers worth Rs 250.8 crore on Monday as per the provisional data from the National Stock Exchange.
Elsewhere in the Asia Pacific region-- South Korea's KOSPI index fell 0.68% to 2066.26. Taiwan's Taiex index lost 2% to 9141.44. Indonesia's Jakarta Composite index dropped 0.4% to 5097.56. New Zealand's NZX50 rose 0.26% to 5104.16. Singapore's Straits Times index fell 0.78% to 3318.40. Malaysia's KLCI declined 0.1% to 1874.06.
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