ASIA MARKETS: Hong Kong Shares Fall On Disappointing China Plenum

By Daniel Inman

Asian stocks dropped after China's leaders failed to provide a clear direction on policy over the coming decade, pushing down the Hong Kong index by the most since late August.

Stocks in China in particular reacted badly to Tuesday's conclusion of the Third Plenum -- a four day meeting that is supposed to set the course for the world's second-largest economy for the coming 10 years. The communique that followed the meeting said market forces would play a "decisive" role in future economic decisions but was lacking in specific details.

Hong Kong's Hang Seng Index fell 1.9% to 22,463.83. Chinese companies listed in the city slumped, with the Hang Seng China Enterprises Index plunging 2.7% to 10276.61. The Shanghai Composite fell 1.8% on the mainland.

China economic data have picked up in recent months, relieving concerns over a slowdown earlier in the year. The Third Plenum was important because it gave an opportunity for the new government to present a plan on how it would reshape the economy in order to achieve sustainable growth. The negative market reaction points toward dissatisfaction over the lack of details after the meeting.

"The communique doesn't provide investors with any upside surprise, and closely watched reforms in state-run enterprises are missed in the documents," said Zhang Gang, an analyst at Central China Securities.

Also Read: The 5 takeaways

The absence of obvious plans to reform the state-owned sector hit large companies owned by the government. The meeting failed to offer plans on how to tackle issues such as restructuring China's state-owned companies or liberalizing local interest rates.

Banks fell sharply in Hong Kong, with China Merchants Bank Co. losing 3.7%. Other companies weighing down Hong Kong included China Petroleum & Chemical Corporation(SNP), which dropped 3%.

Disappointment over the much-anticipated meeting in Beijing was felt across Asia, as Australia's S&P ASX 200 fell 1.4% to 5.319.20, South Korea's Kospi lost 1.6% to 1963.56 and Singapore's Straits Times Index was down 0.4% late in Asia.

Japan's Nikkei shed 0.2% to 14,567.16 after a 3.6% gain over the past two sessions -- the market's largest two-day rise since early September. The move higher in stocks was encouraged by a weakening of the yen, which started to fall at the end of last week after a strong U.S. October labor report gave the dollar some upward momentum.

After weakening towards the Yen100-to-the dollar mark in the past few days, the yen (USDJPY) strengthened in Asia and was last at Yen99.56 compared with Yen99.63 late Tuesday in New York.

Salary data weighed on Australia after local wages, excluding bonuses, rose by a seasonally adjusted 0.5% in the quarter that ended in September -- lower than a 0.7% consensus. The Australian dollar dipped as low as 92.83 U.S. cents but bounced back to 93.04 U.S.

The regional earnings season continues. In Tokyo, Sumitomo Mitsui Financial Group (SMFJY) rose 1.6 after the bank raised its full-year net profit forecast to Yen750 billion from Yen580 billion.

Singapore Airlines was up 0.6% late in Singapore after the carrier reported a sharp rise in its fiscal second-quarter net profit, though it warned that margins will be under pressure in the coming months.

Subscribe to WSJ: http://online.wsj.com?mod=djnwires