By Daniel Inman And Chao Deng
Chinese stocks fell the most in Asia on Thursday in response to
fresh worries over restrictions on lending by local brokerages,
while the rest of the region reacted to expectations that the U.S.
Federal Reserve will remain patient in raising interest rates.
The Shanghai Composite was down 0.9% at 3274.64 after China's
securities regulator said it would inspect margin trading
activities at dozens of companies, according to the
state-controlled news agency Xinhua.
Margin trading--the practice of borrowing money to invest in
stocks--helped the Shanghai benchmark up 53% last year. The
outstanding balance of margin is at just over $1.1 trillion yuan
($177 billion).
Chinese shares sank 7.7% at the beginning of last week when the
regulator said it had suspended three of the country's largest
brokers from opening new margin-trading accounts for clients for
three months. This time around, the regulator told Xinhua that the
inspections were a normal event that "should not be
over-interpreted."
Elsewhere, Hong Kong's Hang Seng Index was down 0.6%, the
Japan's Nikkei Stock Average was down 0.5% and Australia's S&P
ASX 200 slipped 0.1%.
At the forefront of considerations was the U.S. Fed's statement
Wednesday that it will remain patient in raising interest rates.
The U.S. dollar rose against major currencies overnight and was up
0.1% against the yen at Yen117.84 in Asia trade.
Asian investors are weighing the prospect of monetary easing and
interest-rate cuts by central banks around the world with
tightening by the U.S. Fed. More easing is expected to keep capital
flowing into risky assets, including stocks in Asia.
Overnight weakness in oil also weighed on the market.
The Malaysia ringgit fell to a 5 1/2 year low after the
country's central bank kept interest rates on hold Wednesday.
Malaysia is a net exporter of oil and its stocks have been
hardest-hit amid the global oil-price slump.
Write to Daniel Inman at daniel.inman@wsj.com and Chao Deng at
Chao.Deng@wsj.com