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Hong Kong - Asian markets retreated on profit-taking on Tuesday after a healthy run-up over the past week, with Shanghai tanking more than 5%, while energy firms took a hiding as oil prices hit fresh five-year lows.
Sydney-listed energy firms including Santos and BHP Billiton [JSE:BIL] were hammered as crude continued to be bid down owing to an oversupply in world markets.
Tokyo dipped 0.68%, snapping a seven-session winning streak. The Nikkei fell 122.26 points to 17 813.38.
Sydney tumbled 90.0 points to close at 5 282.7 and Seoul gave up 8.00 points to 1 970.95.
Shanghai sank 163.99 points to 2 856.27 after enjoying a stellar performance since last month when China slashed interest rates unexpectedly.
Hong Kong lost 561.84 points to close at 23 485.83, capping a three-day rally.
Traders took their cash off the table after running up impressive gains so far this month, helped by a string of upbeat US data and expectations China will unveil more economy-boosting measures.
Oil prices fell to fresh five-year lows, battered by Opec's decision last month to maintain its output levels despite a global supply glut.
Economic weakness in China, Japan and the eurozone and the strong dollar also pushed down prices.
US benchmark West Texas Intermediate for January delivery fell 26 cents to $62.79 while Brent eased 69c to $65.50.
Energy firms bore the brunt of the pain, with Sydney-listed BHP down 4.05% at a five-year low and Santos off 7.23% to end at levels not seen for a decade.
In Hong Kong CNOOC shed 4.37% and PetroChina was 3.29% lower.
"This has contributed to intensifying the hand-wringing in the market over the potential for massive oversupply in 2015," Greg Priddy, head of energy and resources at Eurasia Group, said in a report, according to Dow Jones Newswires.
Shanghai slumps
Shanghai, which on Monday broke the 3 000 barrier for the first time in three years, was hammered by profit-taking and news that China's securities clearing house had tightened the use of corporate bonds as collateral for short-term financing.
The move is part of an attempt to rein in risky debt issuances from struggling companies and local governments.
"The rally was built on leverage, as many brokerages used bond financing to raise money and lend to their clients to trade stocks," BOC International analyst Shen Jun told AFP.
"The rule will have a big impact on brokerages' lending ability, so that's why we're seeing a pullback and a capital flight. The volatility is no big surprise," he added.
The index has surged 45% this year, with much of that coming since the central People's Bank of China last month unexpectedly cut interest rates, which in turn fuelled hopes for further measures down the line.
The market had rallied in the morning on speculation that authorities are considering a cut to the amount of cash banks must keep in reserve, although that was unable to keep sellers away.
Wall Street provided a tepid lead Monday, with the Dow falling 0.59%, the S&P 500 down 0.73% and the Nasdaq off by 0.84% as US energy firms tumbled along with oil prices.
Tokyo, which has surged since the Bank of Japan in October widened its stimulus programme, eased as the yen ticked up against the dollar.
The greenback bought ¥119.90 compared with ¥120.78 in New York on Monday afternoon.
However, the US unit is still close to seven-year highs and analysts are predicting further advances as the Federal Reserve considers an interest rate rise.
"Market conviction is growing in a Fed rate hike next year," said Joe Manimbo, senior market analyst at Western Union Business Solutions.
In other forex trade the euro bought $1.2354 and ¥148.00 against $1.2308 and ¥148.65 in US trade.
Gold was at $1 204.67 an ounce compared with $1 195.20 late on Monday.
In other markets:
- Taipei fell 58.39 points, to 9 1 28.90.
Taiwan Semiconductor Manufacturing Co was unchanged at Tw$138.0 while Hon Hai Precision Industry shed 2.07% to Tw$90.0.
- Wellington rose 13.61 points to 5 542.93.
Air New Zealand was up 0.63% at NZ$2.395 and Spark surged 3.24% to NZ$3.03.
- Manila slipped 46.69 points to 7 183.87.
- Malaysia's main stock index lost 2.74 points to close at 1 738.10.
SapuraKencana Petroleum fell 2.8% to 2.45 ringgit, while Axiata Group shed 0.5% to 6.62. DiGi.com gained 0.3% to 6.05 ringgit.
- Jakarta ended down 21.70 points at 5 122.31.
Retailer Ramayana Lestari Sentosa gained 1.34% to 755 rupiah, while lender Bank Permata slipped 2.58% to 1 510 rupiah.
- Singapore closed up 22 points at 3 319.84.
DBS Bank ended 1.85% higher at Sg$19.86 and Keppel fell 0.12% at Sg$8.19.
- Bangkok fell 15.99 points to 1 559.56.
Coal producer Banpu lost 0.50 baht to 25.50 while Bangkok Bank added 1.50 baht to 199.50.
- Bombay closed down 322.39 points at 27 797.01.
