Asia report: Markets slide on fresh data from China

(Sharecast News) - A downturn shadowed Asia-Pacific equity markets on Friday, with most indices registering declines. Hong Kong's main board fell more than 2% as investors pored over China's latest trade and inflation data.

"Asian equity markets faced headwinds from Wall Street, where headline CPI data exceeded expectations," said TickMill market analyst Patrick Munnelly.

"The region also contended with softer-than-expected inflation and mixed trade data from China.

"The Nikkei 225 traded negatively, choppy price action initially stemmed the downside."

Munnelly noted that Japanese lawmakers announced plans to release an economic security plan to safeguard vital industries such as semiconductors.

He added that the Hang Seng and Shanghai Composite were down, with technology companies in Hong Kong particularly affected by broker downgrades.

"Additionally, the US was reported to be considering closing a loophole that grants Chinese companies access to American AI chips via overseas units.

"Chinese inflation data underwhelmed, with consumer inflation flat and factory gate prices in deeper-than-forecast decline.

"Mixed Chinese trade data showed exports surpassing expectations but remaining in contractionary territory."

Regional bourses end the week in a sea of red

In Japan, the Nikkei 225 declined 0.55%, closing at 32,315.99, while the broader Topix slipped 1.44% to close at 2,308.75.

Notable decliners on Tokyo's benchmark included Sumitomo Dainippon Pharma, plummeting by 6.33%; Seven & i Holdings, falling 4.48%; and Rakuten, down by 4.32%.

China's equity markets were in the red, too, as the Shanghai Composite dipped 0.64% to 3,088.10, and the Shenzhen Component similarly took a hit, dropping by 0.99% to 10,068.28.

Firms such as China Science Publishing & Media and China Jushi were among the leading decliners in Shanghai, seeing sharp declines of 6.83% and 6.24%, respectively.

Hong Kong's Hang Seng Index retracted by a substantial 2.33%, settling at 17,813.45.

Entities such as JD.com experienced an 11.21% dip, followed by Zhongsheng Group and Chow Tai Fook Jewellery, descending by 6.28% and 5.54%, respectively.

In South Korea, the Kospi index fell 0.95% to 2,456.15, as Hanon Systems declined 14.81% and Hanwha Ocean registered a 6.42% drop.

Australia's S&P/ASX 200 faltered by 0.56%, closing at 7,051.00.

Ingenia Communities Group and Harvey Norman Holdings led the losses, falling by 5.49% and 4.43%.

New Zealand offered a relatively milder narrative, with the S&P/NZX 50 pulling back slightly by 0.24% to 11,265.72.

As the country prepared for a general election over the weekend, ANZ Group Holdings and KMD Brands dropped 2.44% and 2.41%, respectively.

Currency markets were mixed, with the dollar last 0.07% weaker against the yen at JPY 149.70.

The greenback was static on the Aussie, holding at AUD 1.5838, while it strengthened 0.28% against the Kiwi to change hands at NZD 1.6920.

Oil prices were meanwhile in the green, with Brent crude futures last up 3.36% on ICE at $88.89 per barrel and the NYMEX quote for West Texas Intermediate edging up 3.53% to $85.84.

Diverse economic data in focus in China and Singapore

In economic news, Beijing's National Bureau of Statistics reported that China's consumer prices held steady in September, contradicting a Reuters poll's anticipated 0.2% incline.

Additionally, the producer price index registered a 2.5% drop year-on-year - a downturn slightly steeper than economists' forecast of a 2.4% decline.

"China's consumer rebound is likely to pick up only gradually, as household incomes took a hit during the pandemic and people are worried about the shaky jobs market," said Pantheon Macroeconomics chief China economist Duncan Wrigley.

"Policymakers are unlikely to shift their approach of deploying meaningful stimulus through infrastructure and manufacturing investment, rather than via big consumption handouts.

"Financial regulators yesterday called for asking banks to promote auto loans and other consumer loans, but this is likely to have a marginal effect."

Wrigley noted that car markers were waging a price war, albeit with signs of fading intensity.

"This leads people to hold off their purchases in the hope of price cuts.

"Spending on furniture and decoration will remain soggy while the housing market follows a drawn-out recovery."

A fresh release of customs data also revealed a narrower-than-expected contraction in Chinese exports, dropping 6.2% last month compared to a year earlier and proving more resilient than the 7.6% decrease predicted by Reuters.

A simultaneous 6.2% dip in imports slightly surpassed the expected 6% drop.

"Chinese exports are likely to remain weak in the fourth quarter, due to still-sluggish demand from the US and the EU," Duncan Wrigley added.

"China's domestic demand is on the path of a slow recovery on the back of further targeted support, especially funding for infrastructure and manufacturing investment.

"Local governments sped up the issuance of local government special purpose bonds to complete the annual quota by the end of September."

Wrigley said more fiscal or quasi-fiscal support was likely in the fourth quarter as China looked to calibrate support to offset downward growth pressures from insipid exports and a struggling property sector.

"This points to continued modest import demand increase, notably for energy and raw materials."

Elsewhere, the Monetary Authority of Singapore (MAS) stood pat on its monetary policy, maintaining the appreciation rate of the Singapore dollar nominal effective exchange rate policy band, which is the primary tool for managing policy.

At the same time, inflation in the city-state was receding, with core inflation registering at 3.4% year-on-year in August, a subtle ease from July.

The MAS projected a further step-down in core inflation to a range between 2.5% and 3.0% by the end of the year.

In contrast, Singapore's gross domestic product (GDP) demonstrated a modest yet faster-than-expected growth, clocking in a 0.7% expansion year-on-year in the third quarter.

A key driver was the construction sector, which saw 6% growth due to spikes in public and private sector output.

The manufacturing sector shrank by 5% due to declines across most manufacturing clusters, barring transport engineering.

On a quarterly basis, Singapore's GDP ascended 1%, outdoing the previous quarter's 0.1% growth.

Reporting by Josh White for Sharecast.com.