Asia: Equities rebound but on track for worst quarterly performance since recession

Asian stocks recovered from the previous session’s losses on Wednesday, but remained on track for one of their worst quarterly performances since the recession.

The Nikkei 225 Stock Average climbed 2.70% but recorded its worst quarter since 2010, as investors analysed a raft of mixed economic reports.

The country’s industrial production suffered an unexpected decline in August, declined 0.5% month-on-month in August, falling short of the 1.0% gain analysts had expected, although the figure marked a slight improvement from the 0.8% drop suffered in July.

On a year-on-year basis, industrial production grew 0.2%, up from a flat reading in July but way short of the 1.8% increase analysts had forecast.

According to Japan’s Ministry of Economy, Trade and Industry, retail sales grew 0.8% year-on-year last month, compared with a 1.8% gain in July and with analysts’ forecast for a 1.2% increase.

On a month-on-month basis, sales were flat, falling short of expectations for a 0.5% gain and down from the previous month’s 1.4% increase.

Meanwhile, housing starts in the country grew more than expected in August, rising for the sixth consecutive month.

According to the Ministry of Land of Land, Infrastructure, Transport and Tourism, housing starts grew 8.8% year-on-year in August, faster than the 7.6% increase analysts had expected and faster than the 7.4% rise registered in July.

“A second consecutive month contraction in Japan’s industrial production and dreadfully inert retail sales in August revived expectation that the Bank of Japan may add further stimulus to avoid deflation from deepening,” said Ipek Ozkardeskaya, market analyst at London Capital Group.

Over in China, the Shanghai Composite Index rose 0.5%, while the Shenzhen Composite climbed 0.30% and Hong Kong’s Hang Seng gained 1.41%.

However, despite the session’s gains, China’s main stock market notched its worst quarter since 2008, while the Shenzhen Index registered its worst three-month performance in over two decades.

Elsewhere, Australia’s S&P/ASX 200 rose 2.10% but posted its worst quarterly performance since 2011, while South Korea’s Kospi advanced 1.03% and Singapore’s FTSE Straits Times Index edged 0.3% higher.

On the currencies front, the Malaysian ringgit fell 1.38% against the US dollar, extending its quarterly losses to 14% and its yearly decline to 26%, while the Thai baht fell 0.33% against the dollar. The Thai currency was flirting with a new five-year low after recording its worst quarterly performance since 2000.

The yen lost 0.32% against the greenback, while the Australian dollar gained 0.36% against its US counterpart.