Asia report: Markets finish weaker as China GDP beats forecasts

Markets in Asia were weaker across the board on Thursday, with equities in mainland China leading the losses, even after fresh growth data there beat expectations.

In Japan, the Nikkei 225 was down 0.76% at 22,770.36, as the yen weakened 0.19% against the dollar to last trade at JPY 107.14.

Of the major components on the benchmark index, robotics specialist Fanuc was down 2.68% and technology giant SoftBank Group was 1.45% weaker, while apparel group Fast Retailing was 0.99% firmer.

Apple supplier Japan Display joined the Uniqlo owner at the green end of the index, rocketing 8.33% by the close.

The broader Topix index was off 0.66% by the end of trading, closing at 1,579.06.

On the mainland, the Shanghai Composite slid 4.5% to 3,210.10, and the smaller, technology-focussed Shenzhen Composite plunged 5.2% to 2,144.25.

There was some cheer among China stocks, though, with the country’s largest chipmaker SMIC rocketing 246% during their debut session in Shanghai.

They closed up almost 202% at CNY 82.92, which compared healthily to the initial public offering price of CNY 27.46.

In fresh economic data out of Beijing, the country’s GDP grew 3.2% year-on-year in the second quarter, beating expectations for a 2.5% rise according to economists polled by Reuters.

Retail sales, however, were down 1.8% compared to the same time last year, missing Reuters-polled forecasts for a 0.3% improvement.

“If you had any doubts about the accuracy of China’s GDP numbers before this morning’s announcement, these figures only serve to reinforce that scepticism, as they appear to completely diverge from most of the data that has come out of China since April,” said CMC Markets chief market analyst Michael Hewson.

“In terms of the trade data, both imports and exports have been weak, while retail sales have also struggled.”

Hewson also noted that retail sales declined in every month of the quarter.

“With the Chinese consumer now making up around half of China’s economic output, I would suggest these numbers in no way reflect the real picture regarding China’s economy at this moment.”

Geopolitical tensions between Washington and China were also being closely watched, with US Secretary of State Mike Pompeo saying overnight that the US would be placing visa restrictions on Chinese technology companies.

South Korea’s Kospi was off 0.82% at 2,183.76, while the Hang Seng Index in Hong Kong was down 2% at 24,970.69.

Both of the blue-chip technology stocks closed red in Seoul, with Samsung Electronics down 1.65% and chipmaker SK Hynix off 0.36%.

The Bank of Korea sated market expectations during the session, leaving the country’s base interest rate unchanged at 0.5%.

Oil prices were lower at the end of the Asian day, with Brent crude last down 0.69% at $43.49 per barrel, and West Texas Intermediate off 1.12% at $40.74.

In Australia, the S&P/ASX 200 lost 0.69% to 6,010.90, with the hefty financials subindex ending the day down 0.47%.

Of the big four banks in Sydney, Australia and New Zealand Banking Group was down 0.91%, Commonwealth Bank of Australia slipped 0.12%, National Australia Bank was off 0.61%, and Westpac Banking Corporation was 0.95% weaker.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was 0.91% lower at 11,505.06, with Wellington’s benchmark dragged by two of its largest export stocks.

Medical device maker Fisher & Paykel Healthcare was down 3.5%, while specialist dairy exporter A2 Milk was 3.8% lower.

Both of the down under dollars were weaker on the greenback, with the Aussie last off 0.49% at AUD 1.4339, and the Kiwi retreating 0.48% to NZD 1.5290.