Asian stocks slid as Chinese equities tumbled after brokerages tightened margin lending rules amid speculation the government is taking steps to cool the rally. Japanese shares advanced as the yen touched a 12-year low.
Haitong Securities Co. dropped 3.4 percent in Hong Kong as more brokerages required investors to put up additional collateral when borrowing shares. PetroChina Co. sank 2.7 percent as energy producers led declines across the region. Toyota Motor Corp. added 1.7 percent in Tokyo, pacing gains among Japanese exporters on the weaker yen.
The MSCI Asia Pacific Index fell 0.3 percent to 151.47 as of 4:30 p.m. in Hong Kong, erasing gains of as much as 0.6 percent. The Shanghai Composite Index tumbled 6.5 percent, the most since Jan. 19. Record growth in margin debt helped fuel a 143 percent gain in the equity gauge over the past 12 months through yesterday.
“Everybody recognizes that there’s a bubble building up in China,” Nicholas Teo, a strategist at CMC Markets in Singapore, said by phone. “There’s been a huge degree of irrational exuberance in the market. Regulators should start clamping down on margin lending. The question is how do they do this without spooking the market further.”
China’s central bank siphoned tens of billions of yuan from the financial system by selling repurchase agreements to targeted financial institutions, according to two people familiar with the matter. The nation’s money-market rates have tumbled after three interest-rate cuts since November to help an economy growing at the slowest pace since 2009.
The Hang Seng China Enterprises Index of mainland stocks traded in Hong Kong slumped 3.5 percent, while the city’s benchmark Hang Seng Index declined 2.2 percent.
The Philippine Composite Index declined 1.2 percent after the nation’s economic growth slowed to a three-year low last quarter and missed most analyst estimates. South Korea’s Kospi index gained 0.2 percent. Australia’s S&P/ASX 200 slid 0.2 percent, while New Zealand’s NZX 50 Index advanced 0.3 percent.
Japan’s Nikkei 225 Stock Average rose 0.4 percent, advancing for a 10th day to cap the longest winning streak since 1988. The broader Topix index climbed 0.7 percent. The yen traded at 123.92 per dollar after falling as low as 124.92.
E-mini futures on the Standard & Poor’s 500 Index lost 0.1 percent today. The Nasdaq Composite rose 1.5 percent to an all-time high on Wednesday as semiconductor shares rallied, while the S&P 500 gained 0.9 percent.
Germany and France told Greece to get serious about striking a deal on rescue aid, as ministers from the world’s biggest economies urged a resolution of the crisis to stop it from spilling beyond Europe’s borders. Time is running out for the nation to receive funding ahead of almost 1.6 billion euros ($1.74 billion) in IMF payments scheduled for next month, with the first of the transfers due June 5.