Asia: Stocks lower as China cuts growth forecasts

Most Asian stocks were down on Wednesday as China's central bank decided to cut growth forecasts.

The Shanghai Composite index fell 0.15% after slumping nearly 2% at the open, after People's Bank of China cut its gross domestic product and inflation forecasts.

However, analysts took it as a bullish sign of possible future additional stimulus to the world’s second-largest economy.

China's economy is expected to grow 7% this year, slightly lower than previous forecasts of 7.1%. Inflation projections also fell to 1.4% from 2.2%.

The provider of global equity indexes MSCI decided to delay the inclusion of China A-shares in its global benchmarks due to regulatory obstacles.

Chinese authorities have been pushing for an the inclusion of A-shares in a bid to elevate the status of mainland markets on the world stage and make the yuan a more international currency.

Read more: MSCI defers inclusion of China A shares

Tuesday's worse-than-expected Chinese inflation figures, which revealed a slowdown to 1.2% growth in May from 1.5% a month earlier, continued to weigh on sentiment.

In company news, China National Nuclear Power gained 20% in its first day trading in China after raising $2.1bn in its initial public offering, the largest in the country since 2011.

Hong Kong's Hang Seng closed down 1.12%. HSBC lost 0.73% after announcing it will cut between 22,000 and 25,000 job globally and close several branch in a bid to try saving between $4.5bn to $5bn in annual costs by 2017.

In a statement issued to the Hong Kong Stock Exchange, the lender said it would reduce its risk-weighted assets by about $290bn, targeting a return on equity of more than 10% within two years, down from a previous target of 12% to 15% by 2016.

Read more: HSBC targets $5bn in annual cost savings by 2017

Elsewhere in Japan, the Nikkei 225 lost 0.25% as Bank of Japan governor Haruhiko Kuroda said on Wednesday that the yen is unlikely to fall any more in relative terms as it is already “very weak”.

The governor added the dollar was unlikely to rise against the yen if the Federal Reserve hikes interest rates.
Societe Generale currency strategist Kit Juckes said: “USD/JPY is where it is because of the massive contrast between BOJ and Fed policy.”

“If policy ever re-converges, when the BOJ thinks about ending quantitative easing, when the as yet unborn Fed hiking cycle is fully priced in, there’s a lot of downside to USD/JPY. But in the interim, it’s still a ‘buy on dips’.”

In economic data, domestic corporate goods prices rose 0.3% in May from 0.1% a month earlier, while on an annual basis it remained at -2.1%, still better than forecasts of -2.2%.

According to the Cabinet Office, machinery orders improved in April by 3.8% and 3% year-on-year.

Read more: BOJ's Kuroda says further yen weakness is unlikely

On a more positive note, Australia's ASX gained 0.13% helped by China stimulus hopes.

Reserve Bank of Australia's governor Gleen Stevens said the Australian dollar needs to fall further and open to further policy easing to support sustainable growth.

Speaking about the property market, the governor said: "I am very concerned about Sydney, I think some of what's happening is crazy, but we've got a national focus to manage as well - that just increases the complexity."