Asia report: Markets fall as China data overshadows Covid rule easing

Most stock markets in Asia closed in the red on Wednesday, as disappointing trade data out of China overshadowed the announcement that some Covid-19 rules would be eased in the country.

In Japan, the Nikkei 225 was down 0.72% at 27,686.40, as the yen weakened 0.34% against the dollar to last trade at JPY 137.47.

Technology conglomerate SoftBank Group was up 0.85%, while automation specialist Fanuc was down 1.38% and fashion firm Fast Retailing was off 1.89%.

The broader Topix index was off 0.1% by the end of trading in Tokyo, settling at 1,948.31.

On the mainland, the Shanghai Composite lost 0.4% to 3,199.62, and the technology-heavy Shenzhen Component was 0.17% firmer at 11,418.76.

Beijing announced a widely-anticipated easing of some of its controversial Covid-19 restrictions earlier in the day, with the National Heal;th Commission confirming that cross-region travellers would no longer need a negative test result.

It also said that areas not specifically designated ‘high-risk’ could not shut down work or production, while asymptomatic cases could choose five days of home isolation, rather than entering a quarantine facility.

That news was overshadowed, however, by China’s disappointing trade data for November, which saw dollar-denominated exports fall 8.7% year-on-year.

That was well beyond the 3.5% contraction analysts polled by Reuters had pencilled in.

Imports, meanwhile, were 10.6% weaker on the year on a dollar basis, which was also more than the 6% drop Reuters polling had anticipated.

The country’s trade surplus was $69.84bn, lower than the $78.1bn forecast.

“We expect both exports and imports to get worse in the coming months, before improving with the broader economic cycle over the course of 2023,” said Duncan Wrigley at Pantheon Macroeconomics.

“The politburo end-year meeting on 6 December called for striking a better balance between pandemic measures and economic growth.

“The National Health Commission on the same day said that people with asymptomatic and mild Covid cases could choose to isolate at home instead of going to a quarantine centre, in the latest sign of a more relaxed approach to what senior policymakers recognise to be a less severe form of the disease for the vaccinated.

“We expect the upcoming Central Economic Work Conference to stress growth support, especially for consumption, real estate and the platform economy - ie tech sector - to create jobs, as China gradually exits strict pandemic measures in 2023.”

South Korea’s Kospi was 0.43% weaker at 2,382.81, while the Hang Seng Index in Hong Kong tumbled 3.22% to 18,814.82.

Chinese tech plays tumbled by the close in the special administrative region, reversing gains they made earlier before Beijing announced its relaxation of restrictions.

Alibaba Group was down 5.34%, Bilibili lost 3.19%, Baidu slid 3.64%, Meituan was 3.62% weaker, and Tencent Holdings was 3.72% lower.

Airlines were in the green, meanwhile, with Air China up 4.27%, Cathay Pacific managing gains of 0.25%, China Eastern Airlines ascending 6.31%, and China Southern Airlines 2.13% firmer.

The blue-chip technology stocks were weaker in Seoul, with Samsung Electronics down 0.51%, and SK Hynix losing 2.59%.

Oil prices were mixed at the end of the Asian day, with Brent crude futures last down 0.1% on ICE at $79.27 per barrel, while the NYMEX quote for West Texas Intermediate was up 0.03% at $74.27.

In Australia, the S&P/ASX 200 was 0.85% lower at 7,229.40, after the country’s economy grew less than expected on a quarterly basis.

Official data showed gross cosmetic product expanding 0.6% quarter-on-quarter, slower than the 0.9% growth in the second quarter, and below the 0.7% anticipated by Reuters polling.

GDP rose 5.9% on an annual basis in the third quarter, missing expectations for a 6.2% improvement.

“Growth was largely driven by strength in household spending,” said the Australian Bureau of Statistics, adding that data was down to “sustained economic growth since the effects of the Delta outbreak in [the] September quarter [of] 2021”.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 slipped 0.18% to 11,610.99, with aquaculture firm NZ King Salmon tumbling 8.51%.

The losses came after the fish producer said both the NZ Department of Conservation and the McGuinness Institute think-tank had appealed the granting of consent for its ‘Blue Endeavour’ open ocean farming project.

It was a mixed picture for the down under dollars against the greenback, with the Aussie last off 0.19% at AUD 1.4981, while the Kiwi strengthened 0.07% to NZD 1.5805.

Reporting by Josh White for Sharecast.com.