Asian stock markets ended mixed Monday after they rallied to a four-month high in the previous session following the U.S. Federal Reserve's move to boost growth in the world's largest economy with a third round of bond purchases.
Hong Kong's Hang Seng advanced 0.14 percent or 28.33 points to 20,658.11 and India's BSE Sensex gained 0.50 percent or 91.41 to 18,555.68 while Chinese Shanghai Composite plunged 2.14 percent or 45.35 points to 2,078.50 and South Korean KOSPI Composite fell 0.26 percent or 5.23 points to 2,002.35. Japanese Nikkei closed for public holiday.
Asian stocks surged to a four-month high Friday and also ended the week with biggest gains in almost nine months after the Fed announced that it would purchase $40 billion mortgage-backed securities per month for an open ended period until the labor market improved substantially. This combined with the continuation of "Operation Twist" will bring the total increase in long-term securities purchases to about $85 billion per month till December 2012, up from the $45 billion of long-term bonds buying under the current maturity extension program.
Markets have rallied for the last two weeks, helped by a series of good news. The European Central Bank Sept. 6 unveiled a new bond-buying plan called the Outright Monetary Transactions, which aims at lowering the short-term borrowing costs for the most debt-strapped European countries like Italy and Spain. Adding to the sentiment, the German constitutional court gave crucial legal backing to the European Stability Mechanism bailout fund and the European fiscal treaty. This will help reduce the debt burden faced by the countries in the region.
Chinese stocks plunged, led by declines from property sector shares on renewed fears that the local governments could introduce new measures to curb the property market.
Poly Real Estate Group Co Ltd. slumped 6.72 percent and Gemdale Corp. plunged 4.14 percent in Shanghai while China Vanke Co Ltd declined 2 percent in Shenzhen.
Hong Kong shares ended flat as developers' shares were mixed after the Chinese territory's de facto central bank has ordered banks to curb home loans to borrowers with more than one mortgage to prevent the city being flooded with hot money after the United States announced an aggressive new stimulus plan to spur growth, Reuters reported.
Sun Hung Kai Properties Ltd. gained 0.89 percent and Sino Land Co. fell 2.09 percent while Guangzhou Automobile Group Co Ltd. plunged 4.55 percent and Dongfeng Motor Group slumped 6.96 percent.
Seoul shares declined as gains from the banking sector were offset by declines in Samsung Electronics following another U.S. patent defeat to Apple Inc.
Woori Finance Holding Co Ltd. gained 0.85 percent and Shinhan Financial Group Co Ltd. surged 3.20 percent while Samsung Electronics Co Ltd declined 1.57 percent.
In India, retailer and aviation sector shares rallied after the government announced a slew of economic reforms including foreign direct investment (FDI) in retail, aviation and broadcasting sectors in a bid to revive its sluggish economy.
Pantaloon Retail India Ltd. rallied 20.42 percent and Kingfisher Airlines Ltd. climbed 19.91 percent while HDIL surged 12.72 percent.
Meanwhile, the Reserve Bank of India (RBI) cut the cash reserve ratio (CRR) by 25 basis points while keeping the other key rates unchanged in its Mid-Quarter Monetary Policy Review 2012. Not many economists were expecting the RBI to change the key rates as the inflation is still above the comfort levels.