Asian markets shrugged off Wall Street's gains and bled into the red Wednesday, as earnings downgrades and disappointments weighed on investor sentiment.

The Hang Seng dropped 638 points, or 2.6%, to 23,653, while China's Shanghai Composite Index fell 40 points, or 0.9%, to 4417. In Japan, the Nikkei lost 133 points, or 1%, to 13,345.

Other Asian markets fell in line with Hong Kong and Japan. Taiwan's Taiex eased 33 points, or 0.4%, to 7543, and South Korea's Kospi tumbled 49 points, or 3%, to 1589. In India, the Bombay Sensitive Index finished 333 points, or 1.8% lower, at 17,758, perturbed by Tuesday's pat stance on interest rates by the central bank.

Insurance firms in Hong Kong and China took a beating following an announcement by China Life Insurance ( LFC) that it projects net profit to grow by 50%, to 14.38 billion yuan ($2 billion) vs. analysts' expectations of 80% growth.

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"People's high expectations are weighing a lot on the markets. Even in the case of companies like China Life Insurance, where earnings are very good, people were expecting a lot more," says Richard Lee, an analyst for Core Pacific Yamaichi in Hong Kong.

Shares in China Life Insurance plunged 7.4%, to HK$29. China's second largest insurer Ping An ( PIAIF), which met expectations Tuesday, doubling earnings to 7.34 billion yuan ($1 billion), also fell. The stock dropped 6.5%, to HK$57.40, as analysts said that investors were concerned about whether excess cash would weigh on future growth.

Telecoms also fell, although China Unicom ( CHU) bucked the trend as it said that earnings would be more than double the 3.7 billion yuan ($515 million) achieved in 2006. China Unicom gained 1.7%, to HK$18.

Market leader China Mobile ( CHL) tumbled 3.7%, to HK$113.60, while China Netcom ( CN) lost 2%, to HK$24.10, and China Telecom ( CHA) eased 1.8%, to HK$5.58.

Among tech shares, Alibaba.com ( ALBCF) slipped 6.8%, to HK$18.92, as dealers said that hedge funds were unloading big positions throughout the day. ADRs in Baidu.com ( BIDU) were following in Frankfurt morning trading, off 4.4%, to 178.47 euros. Lee says that "fundamentally" Alibaba.com is a good company, and that shares have been selling off due to overvaluation in 2007. "In Asia you see much quicker panic selling than elsewhere," adds Lee.

On the mainland, the insurers dragged on the financial sector. Bank of China ( BACHF) declined 1.4%, to 5.53 yuan, while Industrial & Commercial Bank of China ( IDCBF) slid 2.9%, to 6.46 yuan.

Transportation stocks continued to be the biggest victims of the snowstorms in China. Air China ( AIRYY) dipped 3.5%, to 20.71 yuan, while China Eastern Airlines ( CEA) lost 2.7%, to 14.82 yuan. Since the snowstorms began a week ago, Air China has lost 20% of its market value, and China Eastern has slipped back 16.5%.

The price of the yuan rose to its highest level since the dollar peg was abolished in 2005, to 7.19 yuan vs. the dollar, as currency traders speculated the snowstorms would push inflation higher.

In Japan, a weakening yen could not help offset losses spurred by more subprime jitters. The yen fell to 107 vs. 106.6 previously in Asian trading.

Mizuho Financial ( MFG) announced that it will writedown as much as 300 billion yen, or $2.8 billion, on subprime losses, and that it would inject cash into its ailing securities subsidiary. Mizuho lost 1.6%, to 49,500 yen. Mitsubishi UFJ ( MTU) held up however, off 0.1%, at 1029 yen.

Honda ( HMC) bucked the negative trend and rose 1.2%, to 3300 yen, after the company announced fourth-quarter profit rose 38%, to 200 billion yen, or $1.9 billion. In a phenomenon that gave some investors hope of exaggeration in reports of a global consumption slowdown, Japan's second-largest carmaker cited an increase in sales in the U.S. and Europe.

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