Asia report: Markets mixed amid tsunami of data from China

Markets were mixed in the Asia-Pacific region on Wednesday, with Hong Kong’s main board leading the losses, as investors digested a tsunami of economic data out of China.

In Japan, the Nikkei 225 eked out gains of 0.1% to close at 28,459.72, as the yen weakened 0.06% against the dollar to last trade at JPY 113.77.

Fashion firm Fast Retailing was down 1.33%, while among the benchmark’s other major components, automation specialist Fanuc was up 0.67% and technology giant SoftBank Group was 1.77% stronger.

Carmaker Toyota closed 3.59% higher after it announced plans to invest JPY 8trn into electrifying its range of cars by 2030.

Toyota has long been accused of lagging behind its rivals in terms of electric vehicles, having previously hogged the market with its Prius hybrid technology, before putting much of its attention into hydrogen fuel systems, which have failed to capture market share when compared to EVs.

The broader Topix index was 0.52% stronger by the end of trading in Tokyo, settling at 1,984.10.

On the mainland, the Shanghai Composite was off 0.38% at 3,647.63, and the smaller, technology-heavy Shenzhen Composite was 0.58% weaker at 2,543.49.

A slew of economic data was released from China during the session, with the latest numbers from Beijing showing a 3.8% improvement in industrial output for November.

That was better than the 3.5% growth reported for October, and beat expectations for a 3.6% rise pencilled in by analysts in a Reuters poll.

“The first full month of uninterrupted energy supply saw a boost to industrial production, albeit to still modest levels,” said Pantheon Macroeconomics chief China economist Craig Botham.

“It is worth recalling that despite the gains from September and October, today’s reading is still the third weakest on record if we exclude the Covid-distorted February 2020 reading.

“The monthly improvement was also slightly less than might have been wished.”

Retail sales, meanwhile, were ahead 3.9% year-on-year for November, missing Reuters-polled expectations for an increase of 4.6%.

That was also slower than the 4.9% growth in retail sales reported in October.

“Zero-Covid remains a challenge for retail sales, and a December spike in cases is set to weigh on year-end performance,” Craig Botham said.

“Omicron looks highly likely to be spreading within China, after a local man completed quarantine on return from international travel, flew domestically, and was then found to have the new variant while in a second round of local quarantine.

“Given the greater apparent transmissibility of Omicron, this implies more frequent lockdowns in the months to come.”

In other data from China, new house prices fell 0.33% month-on-month in November, hastening from the 0.25% fall in October.

Fixed asset investment slowed to 5.2% growth for the year-to-date in November, falling from 6.1% in October and coming in short of consensus forecasts for 5.4%, while property investment growth fell to 6%, from 7.2% in October and just below expectations for 6.1% growth.

The People’s Bank of China, meanwhile, injected CNY 500bn into the banking system via the medium-term lending facility (MLF), on the same day it was set to withdraw a planned CNY 950bn through the MLF to counter the previously-announced reserve ratio requirement (RRR) rate cut.

“Overall, around CNY 750bn in liquidity has therefore been added, though we would regard RRR liquidity as ‘better’ than the MLF variety, as it is more permanent, persisting until the PBoC raises the RRR rate, rather than definitely expiring within one year,” Pantheon’s Craig Botham said.

South Korea’s Kospi managed gains of 0.05% to 2,989.39, while the Hang Seng Index in Hong Kong lost 0.91% to 23,420.76.

The blue-chip technology stocks were on the front foot in Seoul, with Samsung Electronics up 0.78% and SK Hynix jumping 2.07%.

Oil prices were lower at the end of the Asian day, with Brent crude last down 0.99% at $72.97, and West Texas Intermediate losing 1.13% to $69.93 per barrel.

In Australia, the S&P/ASX 200 was 0.7% lower at 7,327.10, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was down 0.47% to end the day at 12,869.41.

The down under dollars were both stronger on the greenback, with the Aussie last ahead 0.38% at AUD 1.4022, and the Kiwi advancing 0.09% to change hands at NZD 1.4820.