Trading volume in Hong Kong was relatively thin, suggesting the market could see more downside, analysts said.
Chinese commodity producers were also hit, with China Coal dropping 4.33 per cent and Angang Steel falling 3.77 per cent.
In China, the key Shanghai Composite Index fell 5.3 per cent to 2,319.87 – its lowest close in 20 months – amid a sweeping sell-off of large-capitalized airlines, refiners and other financial shares. Analysts said the sell-down reflected disappointment over a lack of new market support from the government.
Online comments seen Monday that summarized a weekend discussion between government regulators and reporters for state-run media suggested the authorities “would not take any move to save the market,” said Zhai Peng, an analyst at Guotai Junan Securities in Shanghai.
“Obviously, the market was very disappointed with this,” Zhai said. “This is far below investors’ expectations.”
Airlines, which reported falling passenger traffic last month partly due to visa restrictions related to the Olympics, were among the biggest decliners. China Southern Airlines dropped 9.9 per cent, while rivals Air China and China Eastern Airlines both plunged by the 10 per cent daily limit.
Shanghai’s biggest listed share, PetroChina, dropped 4 per cent and Petroleum & Chemical Corp., or Sinopec, slumped 6 per cent.
The market has also suffered from liquidity pressure as billions of newly tradable shares have begun trading this month. The strain was seen in the relatively modest performance by China Southern Locomotive, whose 3 billion shares began trading Monday in Shanghai after an initial public offering that, along with a dual listing in Hong Kong, raised nearly US$1.5 billion.
China Southern Locomotive’s shares peaked at 83 per cent above their IPO price of 2.18 yuan in early trading but later fell back, closing at 3.45 yuan – or 58 percent higher than the IPO value.
Elsewhere, Taiwan’s benchmark lost 2.7 per cent, South Korea’s Kospi slipped 0.3 per cent and India’s Sensex index was 0.5 per cent lower.
In currencies, the dollar stayed steady against the yen Monday, trading at 110.24 yen in the afternoon from 110.49 yen late Friday. The euro bought US$1.4719 compared with US$1.4687.
SHANGHAI-CHINA: Asian markets were mostly lower Monday, as mainland Chinese shares sank to a 20-month low on heavy selling by investors disappointed over a lack of new market-boosting measures.
That, along with a rebound in oil prices, help to drag down stocks in Hong Kong, Taiwan, South Korea and Singapore.
However in Tokyo, the region’s biggest market, the benchmark Nikkei 225 index added 1.1 per cent to close at 13,165.45, as real estate and bank issues climbed.
Mitsubishi UFJ Financial Group gained 3.3 per cent. Sumitomo Mitsui Financial Group added 2.49 per cent. After the markets closed, MUFG said UnionBanCal had agreed to a share price of US$73.50 for the 35 per cent of the US bank that Mitsubishi UFJ doesn’t own. The deal is worth about US$3.5 billion.
Major bank stocks had lost ground last week, sapped by lethargic earnings and rising credit costs following recent bankruptcies among midsize real estate firms.
A relatively strong dollar against the yen boosted most major exporters, including Toyota Motor Corp., Sony Corp. and Canon Inc.
Top property developer Mitsui Fudosan Co. rose 2.2 per cent. The benchmark index in Australia was the only other major stock measure to gain, eking out a rise of less than 0.1 per cent.
Throughout most of the region worries over the global economic outlook and a rebound in oil prices helped pull share prices lower.
Hong Kong’s blue chip Hang Seng Index fell 1.1 percent to close at 20,930.67 in weak trading. “We’re trying to find the bottom,” said Alex Tang, head of research at Core Pacific-Yamaichi. “How far it will go is anybody’s guess.”
Most sectors suffered losses. Foxconn International Holdings, the leading contract mobile phone maker, plunged 24.06 percent after issuing a profit warning last week.
Retail goods and textile exporter Li & Fung lost 0.21 per cent on worries about slumping demand overseas. Upstream producer CNOOC was down 1.87 per cent and Cheung Kong dropped 1.5 per cent.