Asia report: China shares plunge over economic stimulus concerns

Markets in Asia ended mixed on Thursday, with markets in China taking a tumble as concerns grew that the country’s administration would ease up on its economic stimulus measures.

In Japan, the Nikkei 225 was up 0.48% at 22,307.58, as the yen strengthened 0.3% against the dollar to last trade at JPY 111.85.

Of the benchmark’s major components, automation specialist Fanuc was down 0.3% and fashion group Fast Retailing was off 0.43%, while technology conglomerate SoftBank Group rose 0.3%.

The broader Topix index was ahead 0.51% in Tokyo, to finish the day at 1,620.28.

Positive movements came about in Japan after the country’s central bank stood pat on monetary policy at its latest meeting.

Short-term interest rates remained at -0.1% and government bond yields would continue to be guided to remain around 0%.

The Bank of Japan said it looking to keep interest rates at their current “extremely low” levels until at least next year.

On the mainland, the Shanghai Composite was down 2.43% at 3,123.83, and the smaller, technology-heavy Shenzhen Composite plummeted 3.41% to 1,688.25.

It was the biggest fall for Chinese stocks so far in a week of declines, which were instigated by reports that Beijing was looking to pull back on its stimulus measures following better-than-expected economic data.

It was still looking to be a decent year for the country’s bourses overall, with the Shanghai index up more than 25% from the end of 2018, and the Shenzhen maintaining an improvement of more than 30%.

South Korea’s Kospi was 0.48% lower at 2,190.50, while the Hang Seng Index in Hong Kong fell 0.86% to 29,549.80.

Declines in South Korea came after fresh data showed the economy retreating against expectations in the first quarter, with the country putting in its worst three months since the global financial crisis.

The blue-chip technology stocks were in a mixed state, with Samsung Electronics down 0.22% while SK Hynix rose 2.17%.

LG Electronics rocketed up 4.48% after reports the company was considering suspending the production of smartphones in South Korea.

Looking at the region overall, traders mused that the slips in China were not just down to domestic policy, but general sentiment on the state of the world’s economic wellbeing as well.

London Capital Group head of research Jasper Lawler said Asian shares were broadly lower as a result of “lingering concerns” over the health of the global economy.

“Weak data from Germany in the previous session, South Korea’s economy unexpectedly contracting and the Japanese central bank pledging to keep interest rates at record lows until 2020 all served as signs of weak economies across the globe,” he said.

“The move lower in Asia came after the S&P slipped back from Wednesday’s record highs on mixed earnings and falling oil prices.

“The Nasdaq also ended the session 0.2% lower after reaching another intraday record high and the Dow closed 59 points in the red.”

Oil prices were higher as the region went to bed, with Brent crude last up 0.83% at $75.19 per barrel, and West Texas Intermediate ahead 0.29% at $66.08.

In Australia, markets were closed for the ANZAC Day public holiday, as were those across the Tasman Sea in New Zealand.

Both of the down under dollars were weaker on the greenback, with the Aussie last off 0.22% at AUD 1.4286, and the Kiwi retreating 0.05% to NZD 1.5174.