Mainland Chinese shares headed lower after US index provider MSCI said it would hold off including China-listed shares in one of its key benchmark indexes.
The delay to include the shares was seen as a setback in China’s attempts to open up its financial markets and attract foreign capital.
Trading of mainland shares have been volatile but continue to hit new highs.
The Shanghai Composite was down 1.6% to 5,033.61 in early trade.
Even though MSCI said the decision around China-listed shares would remain on its 2016 review list, the delay shows that global asset managers still have reservations about Beijing’s willingness to fully open up its capital markets, according to analysts.
“The early morning announcement suggests that China needs to step up its efforts to liberalise the A shares (Shanghai) market, in particular, increasing foreign participation,” said Bernard Aw, market strategist at IG Markets in a note.
Shares in China National Nuclear Power (CNNPC) jumped 20% in their Shanghai debut after raising $2.1bn (£1.3bn) in the country’s largest initial public offering since 2011.
Hong Kong’s Hang Seng index traded in the opposite direction and was up 0.4% to 27,082.49.
Positive Japan data
Japan’s Nikkei 225 was up 0.4% at 20,171.27 on strong economic data.
Core machinery orders unexpectedly rose in April by 3.8% from the previous month, much higher than expectations of a 2% decline and up from a 2.9% increase in March.
This is a sign that business spending is gaining strength, according to analysts, who said a weaker yen was supporting exporters and the manufacturing sector.
The dollar was at 124.37 yen, compared with 124.31 yen in New York.
In Australia, the S&P/ASX 200 index was up 0.1% to 5,474.60 points.
Shares of Westpac were down 0.4% after one of the country’s biggest banks said that it was splitting its most profitable retail and business banking division to simplify the organisation and improve accountability.
It also announced that the manager in charge of the combined group – Jason Yetton – would leave the bank and position he has held since November 2011.
South Korean shares traded flat with the benchmark Kospi index at 2,064.64.