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Asian shares most weaker after MSCI include China, Shanghai gains

Investing.com -

Investing.com - Shares in Asia traded mostly weaker on Wednesday after MSCI's decision to add mainland Chinese stocks to its emerging markets index gradually and as oil prices slipped around 2% overnight.

Markets in greater China were mixed following MSCI's decision to include A-shares. The Hang Seng Index fell 0.93%, but mainland markets made modest gains with the Shanghai Composite up 0.18% and the Shenzhen Composite edged higher by 0.12%.

Japan's The Nikkei 225 declined 0.26% and South Korea's Kospi fell 0.71%.

Australia's benchmark S&P/ASX 200 index tumbled 1.33%, dragged lower by its energy and materials sub-indexes which were down 2.25% and 2.03% respectively.

MSCI said Tuesday it planned on adding China A-shares to its benchmark MSCI Emerging Markets Index. The index giant said it will add 222 China A Large Cap stocks in a phased manner beginning next year.

The review is the fourth straight year MSCI has considered adding the mainland-traded stocks.

Inclusion in the MSCI will provide "only a modest boost" to capital market reforms in China, especially in the areas of shareholder rights and debt market reform, but is unlikely to be a breakthrough, the Eurasia Group said in a statement.

Overnight, U.S. stocks closed lower on Tuesday, easing from record highs as a slump in energy weighed on the broader market while investors mulled over comments from Washington suggesting that stronger economic growth relied on overhauling the tax system.

Investors fled energy stocks, after oil prices continued to fall amid growing concerns that an uptick in global production would derail Opec's efforts to reduce supply.

U.S. crude for August delivery fell 2.2% to settle at $43.23, its lowest level in more than seven months.

Meanwhile, comments from Washington failed to lift sentiment, as House Speak Paul Ryan said Tuesday that he believed tax reform is "absolutely essential" for getting faster sustainable economic growth.

Ryan's comments came ahead of Treasury Secretary Steven Mnuchin's, who predicted that "massive tax reform" that includes cuts and changes to the system will be completed this year.

Earlier during the session, Boston Fed President Eric Rosengren bolstered expectations for an interest rate hike, saying low interest rates do pose financial stability concerns that central bankers and the private sector must take seriously.

The Dow Jones Industrial Average closed at 21,467.14. The S&P 500 closed 0.67% lower while the Nasdaq Composite fell to 6188.03, down 0.82%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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