HONG KONG: Hong Kong stocks hit an all-time high on Wednesday, breaking a record that had been in place for more than 10 years, but most other major Asia markets fell into the red with energy firms hit by a dive in oil prices.
The dollar rebounded from morning losses to extend Tuesday's recovery though bitcoin was well down following what one analyst called a "cryptocalypse" that saw digital currencies take a hammering.
Hong Kong's Hang Seng Index spent most of the day in negative territory after ending at a record high close on Tuesday. But late buying saw shares stage a recovery to finish up 0.3 percent at 31,983.41 -- overtaking its previous high seen on October 30, 2007.
The HSI surged by a third in 2017 and has continued its stellar run at the start of the new year, with a record 14-day winning streak only ending on Monday.
Analysts now expect the index to press on with its advance to as high as 34,000 by the end of the year.
However, most other markets in the region tracked losses on Wall Street, where investors returned from a long holiday weekend to political horse-trading as Washington lawmakers struggle to avert a crippling government shutdown.
While a deal to fund programmes is expected to be met by the Friday deadline, the uncertainty provided an opportunity to cash in after all three main indexes hit peaks last week.
The retreat also comes after a blistering start to the year for equity traders, and Hartmut Issel, head of Asia Pacific equity and credit at UBS AG Wealth Management in Singapore, told Bloomberg Television: "It's more of a healthy correction" in stocks.
"The last two and a half weeks have been very strong and in some cases we were really wondering if you extrapolate this another three or four weeks we would have exhausted the potential we saw for the entire year."
Tokyo shed 0.4 percent on a stronger yen, while Sydney fell 0.5 percent, Singapore slipped 0.4 percent and Seoul fell 0.3 percent. However, Shanghai added 0.2 percent, while there were also gains in Taipei, Manila and Wellington.
- Energy firms hit -
Among the big losers were energy firms after both main oil contracts sank more than one percent as expectations of falling US stockpiles were overshadowed by worries that Russia is considering ending its role in an output freeze with OPEC.
PetroChina, CNOOC and Sinopec in Hong Kong all lost more than one percent while Japan's Inpex was 1.2 percent lower. Rio Tinto tumbled more than three percent in Sydney, where Woodside Petroleum lost 0.5 percent.
On forex markets the dollar pressed on with a small recovery against its major peers after falling to a three-year low against the euro. But analysts say a move globally towards tighter monetary policy could keep pressure on the greenback.
"Expectations are increasing that other... central banks are readying to enter a path of interest rate normalisation, with the European Central Bank and Bank of Japan joining the (Federal Reserve) spearheading the shifting central bank narrative for 2018," said Stephen Innes, head of Asia-Pacific trading at OANDA.
However, bitcoin was down almost eight percent at $10,900, according to Bloomberg data, having slumped around 15 percent on Tuesday as the volatile cryptocurrency market continues to suffer broad losses.
The selling spread to other alternative digital units, with ethereum, ripple and litecoin all losing about a quarter of their value Tuesday.
Bitcoin is down from record highs approaching $20,000 in the week before Christmas, having rocketed 25-fold over the year, hit by concerns about a bubble and worries about crackdowns on trading it.
"It's been a Cryptocalypse overnight with BTC and other virtual currencies coming under heavy selling pressure," said Greg McKenna, chief market strategist at AxiTrader.
But Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers, sounded a slightly positive note, saying: "Not all hope is lost. The cryptocurrency market is privy to these wild swings and seasoned veterans in this space have seen this happen many times previously.
"Not saying that it couldn't be different this time but every major correction has been followed up by a rally more powerful than the last."
- Key figures around 0820 GMT -
Tokyo - Nikkei 225: DOWN 0.4 percent at 23,868.34 (close)
Hong Kong - Hang Seng: UP 0.3 percent at 31,983.41 (close)
Shanghai - Composite: UP 0.2 percent at 3,444.67 (close)
London - FTSE 100: DOWN 0.1 percent at 7,748.89
Euro/dollar: DOWN at $1.2214 from $1.2259 at 2200 GMT
Pound/dollar: DOWN at $1.3776 from $1.3794
Dollar/yen: UP at 110.80 yen from 110.53 yen
Oil - West Texas Intermediate: DOWN three cents at $63.70
Oil - Brent North Sea: DOWN one cent at $69.14 per barrel
New York - DOW: FLAT at 25,792.86 (close)
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