Asia report: Chinese property plays fall, RBA pulls plug on 'key tool'

Markets were mostly weaker at the close in Asia on Tuesday, with Chinese property plays under particular pressure amid fresh fears for the sector.

In Japan, the Nikkei 225 was down 0.43% at 29,520.90, as the yen strengthened 0.32% against the dollar to last trade at JPY 113.64.

Uniqlo owner Fast Retailing was up 0.37%, while among the benchmark’s other major components, robotics specialist Fanuc was down 0.24% and technology giant SoftBank Group lost 0.21%.

The broader Topix index ended the session off 0.64%, settling at 2,031.67 in Tokyo.

On the mainland, the Shanghai Composite was down 1.1% at 3,505.63, and the smaller, technology-heavy Shenzhen Composite lost 0.81% to 2,392.27.

South Korea’s Kospi was the region’s odd one out, managing gains of 1.16% to 3,013.49, while the Hang Seng Index in Hong Kong was 0.22% lower at 25,099.67.

Real estate stocks were on the back foot in the special administrative region, with China Evergrande down 2.9%, China Vanke falling 4%, and Sunac China plummeting 9.6%.

Those moves came after Moody’s downgraded property developer Yango Group on Monday, after the company offered to swap some dollar-denominated bonds.

Yango proposed new notes, personally guaranteed by its founder, in return for the dollar bonds in a bid to avoid “imminent” defaults on its payments.

“[The company] may not be able to mobilise all of its cash holdings to repay its maturing debts,” Moody’s warned on Monday.

Seoul’s blue-chip technology stocks were on the front foot, meanwhile, with Samsung Electronics jumping 2.29% and SK Hynix ahead 0.94%.

“Asian shares were mixed on Tuesday as investors braced for a pivotal week, jam-packed with key central bank meetings and economic reports from major economies,” said FXTM senior research analyst Lukman Otunuga.

“Currency markets are holding in tight ranges while gold prices rose slightly due to a softer dollar.

“Risk appetite may sour as market players look ahead to the Fed decision and US monthly non-farm payrolls report from a safe distance.”

Oil prices were mixed as the region went to bed, with Brent crude last up 0.04% at $84.74 per barrel, while West Texas Intermediate was 0.1% weaker at $83.97.

In Australia, the S&P/ASX 200 was behind by 0.63% at 7,324.30, as the country's central bank kept its cash rate unchanged at its current record low of 0.1%.

The Reserve Bank did, however, remove its 10-basis point target for the 2024 Australian government bond, with the bank’s governor Philip Lowe saying putting that decision down to an improving economy, and “earlier-than-expected progress” towards its inflation goals.

“Given that other market interest rates have moved in response to the increased likelihood of higher inflation and lower unemployment, the effectiveness of the yield target in holding down the general structure of interest rates in Australia has diminished,” he said.

AJ Bell investment director Russ Mould said the RBA’s decision to scrap one of its three key tools, and start tightening monetary policy, provided an “extra edge” for the upcoming meetings of the US Federal Reserve and the Bank of England.

“Persistent inflation, a rash of rate rises around the globe and moves to taper or even halt quantitative easing in New Zealand, Canada and others all beg the question of whether the American and British monetary authorities are in danger letting policy run too loose for too long - although some would argue the damage is already done on that front,” he said.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 slipped 0.29% to 12,992.50, led lower by Wellington-traded shares of the large Australasian banks following the RBA's decision.

Australia and New Zealand Banking Group was off 0.61%, while Westpac Banking Corporation was 4.66% weaker in New Zealand trading.

The down under dollars were both weaker against the greenback, with the Aussie last off 0.8% at AUD 1.3401, and the Kiwi retreating 0.73% to NZD 1.4015.