Asia: Equities decline as China devalues yuan for a second day running

Asian stocks fell on Wednesday as China decided to devalue its currency for a second day in a row.

The Shanghai Composite Index lost 1.58% after China’s central bank devalued its currency for the second day, adding to concerns about the slowdown in the world’s second largest economy.

It cut its national currency, the yuan, by another 1.6%, after Tuesday's 1.9% devaluation. China's commerce ministry said the lower rate would help struggling exporters.

Accendo Markets analyst Mike van Dulken said the decision is fuelling concern that market volatility from a new round of ‘currency wars’ could curb global growth outlook.

FxPro senior analyst Angus Campbell said the move impacted risk assets due to the unpredictability of the People’s Bank of China as it will have a knock on deflationary impact for China’s big trading partners.

Campbell said it would not be a surprise to see further weakness to follow as China tries to give exporters a more competitive environment.

In other news, data published by the National Bureau of Statistics of China showed retail sales were at 10.5% in July from 10.6% same time last year. Industrial production also rose at a slower pace at 6% against forecasts of 6.6%.

Also on Wednesday, Chinese urban investment came at 11.2% in July, lower than expectations of a 11.5% growth.

Capital Economics analysts said: "The data are weaker than expected which will undoubtedly add to speculation that policymakers are trying to engineer a sustained devaluation of the renminbi in order to shore up growth."

However, the economists added that the data is "not as bad as it looks and that with the impact of policy easing beginning to feed through into stronger credit growth, economic activity should hold up well in the months ahead".

China Eastern Airlines was hurt by the news, losing 5.71% in the stock market. China Southern Airlines also fell 5.99%.

In Hong Kong, the Hang Seng index declined 2.58%.

Elsewhere in Japan, the Nikkei 225 index was down 1.58% as investors worried about the country's exports to China, its biggest trading partner.

The yen was up 0.57% at ¥124.46 against the US dollar.

In economic news, domestic corporate goods price index declined 3% in July, compared with -2.4% same time last year and against expectations of -2.9%.

On the bright side, industrial production rose 1.1% in June from 0.8% in May. Tertiary industry index also rose 0.3% after posting a decline of 0.6% in May.

In Australia, the ASX index slide 1.66% on the back of a decline in commodity prices.

The Commonwealth Bank of Australia posted a record full-year net profit of $8.7bn and announced it will raise $5bn to boost capital following regulatory pressure.

Meanwhile, the Australian dollar was down 0.05% to $0.73 against the US currency.

In corporate news, BHP Billiton lost 2.35% following news it plans to cut 380 mining jobs in South Australia. Oil and gas company Santos also declined 4.85%.

Rio Tinto lost 1.88% after losing a court appeal against an asbestosis compensation claim.