Asian stocks fall as China tumbles on regulatory jitters; Nikkei stalls

Updates with more information on China

Investing.com-- Most Asian stocks sank on Friday with Chinese markets leading losses on fears of more regulatory headwinds at home and abroad, while a rally in Japan’s Nikkei 225 ran dry after strong inflation data. 

Global markets were caught off guard by an unexpected interest rate cut by the Swiss National Bank. The move sparked outsized flows into the dollar, pressuring risk-driven assets outside the U.S. 

This saw Asian markets largely disregard a strong lead-in from Wall Street, which closed at record highs on Thursday. U.S. stock futures also trimmed early gains and traded sideways in Asian trade.

Chinese stocks tumble on US sanctions, financial regulation fears

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes slid 1.6% each on Friday, and were among the worst performers in Asia. Losses in technology and mainland stocks dragged Hong Kong’s Hang Seng index down nearly 3%.

Chinese technology stocks were battered by fears of more U.S. sanctions, after a top  Commerce Department official suggested that SMIC- the country's biggest chipmaker- may have violated U.S. trade law in making a processor for a flagship Huawei phone.

SMIC, formally known as Semiconductor Manufacturing International Corp (HK:0981), slid over 5% in Hong Kong trade, with losses in the chipmaker spilling over into broader technology stocks.

Sentiment towards China was also rattled by reports of a new U.S. bill that will limit investment in Chinese stocks by U.S. mutual fund firms. Such a move presents a drastic decline in foreign capital flows to the country.

Concurrently, local media reports said that Chinese government officials had met with mainland mutual fund operators in a bid to increase Beijing's supervision of the firms.

Nikkei rally cools after brief burst above 41,000; CPI rises 

Japan’s Nikkei 225 index was flat on Friday after briefly rising as much as 1% to a record high above 41,000 points.

But gains in the Nikkei were short-lived as data showed Japanese consumer price index (CPI) inflation grew sharply in February. The reading came just days after a historic interest rate hike from the Bank of Japan, and lent further credence to the BOJ’s hawkish long-term outlook.

Analysts at Citi said the Nikkei was likely to remain rangebound around 41,000 points, amid a dearth of immediate catalysts for a push higher, as well as an eventual tightening in policy by the BOJ. 

Broader Asian markets retreated. Australia’s ASX 200 fell 0.5% after rising to near record highs earlier in the week.

Losses in heavyweight technology stocks pulled South Korea’s KOSPI 0.4% lower.

India’s Nifty 50 index rose 0.2% and remained above the 22,000 level, after marking a strong rebound in the prior session.