Asian stocks erased most of their gains on Wednesday as Chinese shares slumped despite upbeat economic data, while the yen was steady after the Bank of Japan slightly trimmed its economic growth projection. Investors continued to await other key events, including a Greek parliamentary vote on austerity measures and congressional testimony by the U.S. Federal Reserve chief.
MSCI’s broadest index of Asia-Pacific shares outside Japan was flat as Chinese shares skidded, with Shanghai’s benchmark composite index down 2.5 percent, and the CSI300 index of the largest listed companies in Shanghai and Shenzhen falling 2.6 percent. China’s second quarter gross domestic product grew an annual 7.0 percent, steady with the previous quarter and slightly better than analyst forecasts. Fixed-asset investment and industrial output growth also beat economists’ forecasts.
Further stimulus is still expected after the quarter ended with a savage correction that shaved about 30 percent off share market value since last month, before Beijing’s support steps stemmed the freefall. “Stock investors at present care more about what the government policy toward the market is, whereas the connection between the economy and the market has somehow loosened,” said Zhang Qi, senior stock analyst at Haitong Securities in Shanghai.