On Tuesday, the Shanghai Index dived 6.1 percent to end at 3,749.12 points, the biggest daily decline in three weeks, breaking a three-day winning streak.

“Investors are pessimistic on China’s economy in the second half and are choosing Hong Kong to sell off”, said Castor Pang Wai-sun, Core Pacific- Yamaichi head of research, given that the “distorted” A-share markets have shut foreign short-sellers outside. Japan’s Nikkei 225 slipped 0.5 percent to 20,458.50 and South Korea’s Kospi fell 1.6 percent to 1,925.17.

Asian shares were mixed on Wednesday (Aug 19), with Shanghai rebounding from heavy falls to close higher on expectations of more state support while Tokyo slumped after the release of weak trade data. 8350 on Nifty is the level to watch out for, says Mitesh Thacker, Technical Analyst, miteshthacker.com in an interview with ET Now. Profits at Chinese industrial firms declined by 0.3 per cent in June, versus a 0.6 percent gain in the previous month.

Both the Hang Seng China Enterprises and the Shanghai Composite have tumbled more than 30 per cent from this year’s highs, even as the government took unprecedented measures to shore up mainland equities.

The Standard & Poor’s 500 index dropped 43 points, or 2.1%, to close at 2,035.

But investors hope Beijing will further cut rates or lowering the reserve requirements – which would be positive for the stock market.

More than 62 per cent of companies in the Shanghai Composite trailed analysts’ 2014 earnings estimates as the economy expanded at its weakest pace since 1990.

Gold notched its best day in almost four months Thursday on anticipation that the Federal Reserve will stand pat on interest rates and amid volatile currency moves.

But investors nevertheless bet on companies with investments from state-backed investor Central Huijin, and state margin lender China Securities Finance Corp (CSFC), which was tasked with propping up share prices during crisis.

“Any inaction could trigger a new round of selling”. Henderson Land, another major developer in Hong Kong, fell 2.16 percent to 45.2 HK dollars, and Cheung Kong Holding, a powerful HK-based developer controlled by billionaire Li Ka-shing, retreated 2.67 percent to 105.8 HK dollars.

Sentiment remains bruised in Shanghai, however, with persistent worries over the weak economy and the fallout from a surprise devaluation of China’s yuan currency last week.

US benchmark West Texas Intermediate for September delivery fell 24 cents to $42.38 a barrel and Brent crude for October dipped 26 cents to $48.55 a barrel in afternoon Asian trade.

The euro rose to $1.1255 and 138.39 yen, compared with $1.1241 and 138.69 yen in New York.

Asia got a negative lead from Wall Street after US shares sank more than 2.0 per cent on Thursday, with the Dow dropping to its lowest level for 2015.