Asia report: Markets mixed as China data disappoints

Markets in Asia were mixed on Wednesday, with a downplayed reaction from investors to China’s trade data for May being offset by a boost in the energy sector from rising oil prices.

In Japan, the Nikkei 225 managed to reverse early losses to close up 0.93% at 16,830.92.

The yen weakened against the greenback during the session, though it began to claw back later, last trading 0.21% ahead at JPY 107.14 per USD.

Before the opening bell in Tokyo, Japan’s revised first quarter gross domestic product numbers were released, showing an annualised expansion of 1.9%, an improvement from the preliminary reading of 1.7%.

On the corporate front, Japan Display shot up 5.34% after a report from Reuters claimed that the company’s largest shareholder - the state-backed Network Corporation of Japan - is meeting with other lenders to discuss the smartphone screen manufacturer’s health.

Higher oil prices sent Japan Petroleum shares northwards, finishing up 1.76%.

According to Reuters’ sources, the Apple iPhone supplier was the subject of a short-term JPY30bn loan in late May.

On the mainland, the Shanghai Composite Index lost 0.32% at 2,926.69, while the Shenzhen Composite finished down 0.32% at 1,918.62.

The higher crude prices helped most oil stocks in the People’s Republic, with Sinopec adding 0.16% by end of play.

Trade data for May was released, with proof that the world’s second biggest economy was still struggling to regain momentum.

Exports fell 4.1% year-on-year in dollar-denominated terms, much wider than April’s 1.8% fall.

Imports were down 0.4% year-on-year, which was a welcome narrowing from April’s drop of 10.9%.

“We need to wait for a firmer recovery in the U.S. and Europe so that China's export growth can sustain a positive growth,” noted ANZ analysts Raymond Yeung and Louis Lam.

“For imports, even though we do not expect a strong rebound in the near term as domestic demand will likely edge down on a tighter credit environment, China will likely see a sizable trade surplus in the next few months.”

In Hong Kong, the Hang Seng Index was off 0.14% at 21,297.88, with South Korea’s Kospi adding 0.77% to 2,027.08.

Korea’s Finance Minister said on Wednesday that the government and the Bank of Korea are to create a KRW 70trn fund to support the two state-operated banks exposed to shipping and shipbuilding - industries undergoing a restructure.

Shipbuilders were mixed on the news, with Daewoo Shipbuilding & Marine Engineering losing 1.33% and Samsung Heavy Industries down 1.47%, while Hyundai Heavy Industries added 1.76%.

Oil prices were ahead overnight as expectations of a US stockpile drawdown picked up.

Prices kept rising as Asian traders headed for bed, with Brent crude last up 0.81% at $51.86 and West Texas Intermediate adding 0.65% to $50.69 per barrel.

In Australia, the S&P/ASX 200 finished just south of the mark at 5,369.98, a loss of 0.02%, dragged down by a 0.15% drop in the weighty financials subindex.

Of the major regional banks, Australia and New Zealand Banking Group lost 0.52%, Commonwealth Bank of Australia was down 0.45% and National Australia Bank finished off by 0.45% as well.

Westpac bucked the trend, closing up 0.29%.

Rhetoric from Moody’s Investors Service late in the session said Australian banks were looking at increased tail risks from rapidly rising domestic house prices.

Data released earlier in the session showed the value of mortgages issued for investment in Australia dell 5% from March, but owner-occupied home loans rose 1.7% month-on-month on a seasonally adjusted basis.

That was still below a 2.5% forecast rise in a Reuters poll of economists.

“Looking through the volatility, the data remain consistent with the declines in building approvals over the first half of 2016 and our view of a diminishing tailwind from housing construction over the year and a deeper downturn into 2017,” said Goldman Sachs analysts in a note.

Over in New Zealand, the benchmark S&P/NZX 50 fell below the 7,000 mark to close down 0.7% at 6,991.51, led by a surprise merger proposal in the telecommunications industry.

Telephony and broadband leader Spark lost 4.3% after the country’s largest subscription television provider Sky (unrelated to the UK company of the same name) announced it was in talks with Vodafone’s local operation about combining their domestic assets.

Sky’s shares were in a trading halt for the day as a result of the announcement.

“Sky has been talking about doing something from a capital management or asset buying perspective,” said Nikko Asset Management senior portfolio manager James Lindsay.

“That's unlikely to be an outright bid for Vodafone's assets but a merger or scheme of arrangement seems pretty logical.”

The down under dollars were also mixed, with the Aussie moving away from the greenback - it was last 0.22% weaker at AUD 1.3436.

Across the Tasman Sea, the Kiwi was ;ast 0.15% stronger at NZD 1.4307 to the dollar.