Asia: Equities struggle for direction after Chinese data

Asian stocks began the week on a mixed note, as data released on Monday showed the Chinese economy expanded at its slowest pace in six years.

The Shanghai Composite Index reversed earlier gains to close down 0.14%, while Hong Kong’s Hang Seng edged 0.04% higher.

China’s National Bureau of Statistics said gross domestic product rose 6.9% in the third quarter compared with 7% in the first two quarters.

This was better than the 6.8% forecast by economists but still the worst rate of growth since the first quarter of 2009.

“Today’s data suggest that while the official GDP figures continue to overstate the actual pace of growth in China by a significant margin, underlying conditions are subdued but stable,” said Julian Evans-Pritchard, China economist at Capital Economics.

“Looking ahead, our view continues to be that stronger fiscal spending and more rapid credit growth will limit the downside risks to growth over the coming quarters.”

Meanwhile, Chinese industrial production rose 5.7% in September, missing economists’ expectations of a 6% gain, while retail sales were up 10.9%, a touch ahead of the 10.8% increase expected.

“Overall, we see some nascent signs of growth stabilisation in the non-financial sector driven by fiscal stimulus but no evidence of a durable rebound in the coming months,” said analysts at Nomura.

“We continue to expect moderate fiscal stimulus from the central government and continued monetary easing, with one more bank reserve requirement ratio cut in the fourth quarter and another four in 2016.”

Elsewhere, Japan’s Nikkei Stock Average slid 0.88%, while Australia’s S&P/ASX 200 gained 0.03% and South Korea’s Kospi was flat.

On the currencies front, China’s onshore yuan lost 0.11% against the dollar, trading at its lowest level against the greenback since late September.

The yen slid 0.12% against the dollar, while the Australian dollar climbed 0.49% against its American counterpart.

Meanwhile, prices of most commodities declined following the release of China’s third quarter figures, underlining worries over the state of the world’s second-largest economy.