Stocks in Hong Kong and Shanghai led Asian equity losses Tuesday as a smaller-than-forecast interest rate cut by China's central bank added to worries about the lack of action to kickstart the country's lumbering economic recovery.
The optimism that fed last week's rally across world markets appears to be fading as traders are left disappointed by Beijing's efforts to act, even as growth slows and weakness persists.
The People's Bank of China reduced its benchmark five-year rate -- used to price mortgages -- by 10 basis points, less than the 15 points expected, though it did meet forecasts for a 15-point reduction in the one-year rate.
The move came after monetary policymakers last week lowered two other key rates and pumped billions into financial markets.
Stocks in Hong Kong dropped more than one percent, with tech firms -- which are susceptible to higher borrowing costs -- taking the brunt of the selling, while property companies also dropped. Shanghai was also in negative territory.
Robert Carnell, at ING, said that with the cuts being so small that "isn't going to do an awful lot to boost the struggling economy".
"Even with further reductions, and we expect more of the same in the coming months, perhaps several iterations of cuts, it is not likely that we will see demand for property swing around strongly, construction will likely remain weak, and local governments will continue to feel the pinch from reduced land sales and tight finances."
Seoul, Singapore, Taipei, Mumbai, Bangkok, Manila and Jakarta all dropped, though Tokyo, Sydney and Wellington rose.
However, London, Paris and Frankfurt reversed opening losses to post small gains.
The retreat extended Monday losses that were fueled by frustration at the lack of detail from officials on measures to boost the economy, which has failed to recover since painful zero-Covid measures were removed at the end of last year.
There had been hope they would unveil help for the troubled property sector -- a crucial growth driver of GDP -- as well as consumer activity and youth unemployment.
AFP