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Hong Kong - Chinese banking shares fell for a second day on Wednesday after a sovereign fund unloaded a stake in two banks, flashing a cautious signal about risk even after the euro clawed back losses endured on Moody's downgrade of Portugal to junk status.
A rally in riskhy assets has stalled after a week, as investors take a cautious stance ahead of a European Central Bank meeting on Thursday, Friday's US payrolls report and the latest inflation and GDP data from China next week.
However, Japan's Nikkei stock index bucked the trend, as investors scrambled to latch on to a 1.1% climb, which lifted the market to the highest since the first full trading day after a devastating earthquake and tsunami in March.
The MSCI Asia ex-Japan index rose a modest 0.2% with weakness in financials largely offsetting gains in materials and industrials.
Financials were led lower by a second day of underperformance by China's banking sector, often considered a proxy for the country's economy, after Singapore's Temasek, a sovereign wealth fund, sold part of its stake in two of the so-called "Big Four" Chinese banks.
Temasek sold a combined $3.6bn worth of shares in Bank of China and China Construction Bank sending their shares down over 3%.
Financials, which carry the biggest weight by far as a sector on Chinese bourses, pulled the Hang Seng down 0.4% and pushed the Shanghai Composite 0.7% lower and further from Tuesday's six-week high.
Shanghai stocks had made a strong rebound over the past fortnight, with the index rising 8% to a six-week high. But that bounce has stalled on fresh fears about the impact of China's local government debt on the sector.
"Valuations-wise, we've probably seen the bottom but it's a confidence issue right now," said Tom Kaan, a director at Louis Capital Markets in Hong Kong.
The Temasek move comes a day after ratings agency Moody's warned that its credit outlook on Chinese banks may turn negative as China's local government debt may be understated by as much 3.5 trillion yuan.
