ASIA MARKETS: Asia Stocks Fall Sharply After U.S. Losses

By Laura He and Michael Kitchen, MarketWatch

HONG KONG (MarketWatch) -- Asian stocks declined sharply on Wednesday, with Japan leading losses on a firmer yen and a sell-off overnight on Wall Street.

Following substantial losses in U.S. markets, Japan's Nikkei Average tumbled 2.9% at the close, while the yen (USDJPY) strengthened against the dollar as the dollar bought Yen101.502 from Yen101.678 in the previous day.

Hong Kong's Hang Seng Index finished 1.1% lower, South Korea's Kospi index ended down 1%, China's Shanghai Composite Index fell 0.9%, and Australia's S&P/ASX 200 lost 0.8%.

Some of major movers include Japanese tech giant SoftBank Corp. plunging 5.1%, Renesas Electronics Corp. sliding 4.5%, Olympus Corp. falling 3.5%, and Panasonic Corp. losing 3.4%.

Hong Kong-listed tech stocks were also weak, with Chinese Internet giant Tencent Holdings (TCEHY) dropping 3.8%, and software provider Kingsoft Corp. falling 7.6%.

Property developers and casinos fell broadly in Hong Kong. Among the top decliners, Shimao Property Holdings dropped by 6%, and Vanke Property (Overseas) pulled back 5.7%. Macau casino operator Melco Crown Entertainment gave up 4.1%, and both Galaxy Entertainment Group and MGM China Holdings were off 3.4%.

China's service sector slowing, too

The downward revision to HSBC's China manufacturing PMI dragged down Hong Kong stocks earlier this week, and now it turns out that HSBC's services PMI is also on the decline.

The April report, released earlier Wednesday, showed the headline number falling to 51.4 from March's 51.9, though remaining above the 50 level separating expansion from contraction.

The details weren't great either, with the employment subindex hitting a seven-month low to stand just above the 50 mark.

HSBC chief China economist Hongbin Qu took a bit of comfort from the fact that, unlike with the manufacturing gauge, the services PMI still indicates a growth in activity.

"Today's release showed that the service sector is still a relatively resilient part of the economy, but it is not expanding at a fast enough pace to offset the manufacturing slowdown," Qu wrote in comments accompanying the data.

Nonetheless, HSBC is holding to its view that China's economy will remain "on a modest path of expansion over the next few months," Qu wrote.

(This post originally appeared as part of MarketWatch's Asia Markets live blog.)

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