HONG KONG: 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 energized 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.