Asia: Disappointing Chinese data drags stocks lower, Japan remains upbeat over stimulus

Asian stocks began the week on a mixed note, as Chinese and Japanese stocks surged but worries over a slowdown in China dragged other markets lower.

The Shanghai Composite Index gained 1.58% after a 6% rally last week, while Hong Kong’s Hang Seng declined 0.61%.

Data released overnight showed China’s exports fell 6.9% year-on-year in October while imports dropped by another 18.8% compared with analysts’ expectations for 3.2% and 15% decline respectively.

“Another poor batch of trade data overnight appears to have done nothing to shake investor confidence in China, despite a significant drop in both imports and exports being behind the record trade surplus,” said Oanda’s senior market analyst Craig Erlam.

“Other countries in the region haven’t shaken this off so well given that they depend heavily on China for trade but maybe the possibility of more stimulus from the People’s Bank of China on the back of this is enough to keep investors happy.”

On Saturday, the People’s Bank of China said foreign-exchange reserves in October rose by $11.39bn to $3.526trn, bringing a five-month streak of monthly declines to an end.

“In this year alone exports to Japan have declined 9%, and to the EU they have declined 3.7%,” said CMC Markets’ chief analyst Michael Hewson.

"This suggests that it seems likely that at some point Chinese authorities may have to take further steps to ease policy further, with potentially another move in the US dollar peg likely in the coming weeks, and months

In Japan, the Nikkei Stock Average rose 1.96% to close at 19,642.74, its highest closing level since late August as investors continued to hold out hope for fresh stimulus measure by the central bank.

Japanese stocks were also boosted by the prospect of higher interest rates in the US, after Friday’s better-than-expected jobs report considerably shortened the odds over a December rate hike.

Elsewhere, Australia’s S&P/ASX 200 fell 1.83% as the continued decline in commodity prices weighed on stocks, while South Korea’s Kospi slid 0.75%.

On the currencies front, the yen declined 0.23% against the dollar, reaching a new two-month low against the greenback, while the Australian dollar gained 0.29% against its US counterpart.

Meanwhile, the Malaysian ringgit slid 0.69% against the dollar, trading at its weakest level against the greenback in a month.