Asia report: Markets mixed as China GDP growth falls short in Q3

Markets were in a mixed state in Asia as they closed on Monday, with investors digesting the latest data indicating the economic performance of the world’s second-largest economy, China.

In Japan, the Nikkei 225 was down 0.15% at 29,025.46, as the yen weakened 0.11% against the dollar to last trade at JPY 114.35.

Technology conglomerate SoftBank Group was down 0.83%, while among the benchmark’s other major components, automation specialist Fanuc was up 0.04% and fashion firm Fast Retailing jumped 0.96%.

The broader Topix index was off 0.23% by the end of trading in Tokyo, closing at 2,019.23.

On the mainland, the Shanghai Composite was down 0.12% at 3,568.14, and the smaller, technology-heavy Shenzhen Composite eked out gains of 0.06% to 2,402.04.

Fresh data out of Beijing showed China’s gross domestic product expanded by 4.9% year-on-year in the third quarter, missing expectations for a 5.2% increase according to analysts polled by Reuters.

Industrial output growth was also weaker than Reuters-polled expectations in the People’s Republic, coming in at 3.1% in September, compared to the 4.5% that had been pencilled in.

“A slowdown in the year-on-year figure was always on the cards given base effects, but the quarter-on-quarter slowdown from 1.2% to 0.2% reflects the headwinds that arose in the third quarter,” said Pantheon Macroeconomics chief China economist Craig Botham of the GDP numbers.

“An obvious candidate for such a headwind is the energy crisis that emerged in September, and sure enough, delving into the subcomponents, there was a particularly sharp slowdown in secondary sector GDP growth, from 7.5% year-on-year to 3.6%.

“Meanwhile, tertiary sector GDP growth also saw a considerable slowdown, to 5.4% year-on-year from 8.3%.”

Botham said a larger part of that decline could be attributed to base effects, but thought that also showed the chill extending across the property sector.

“We will need to wait for a more detailed industry breakdown to confirm the drivers, but the monthly data does seem to support this interpretation.”

Craig Botham said the weakness in the third quarter would indeed extend into the final three months of the year.

“Energy shortages worsened in October, and the policy response has brought higher prices which will weigh on production.

“Property sector stresses meanwhile seem not to have abated, but instead spread to more developers, and property sales are in steep decline.”

South Korea’s Kospi was down 0.28% at 3,006.68, while the Hang Seng Index in Hong Kong managed gains of 0.31% to 25,409.75.

The blue-chip technology stocks were mixed in Seoul, with Samsung Electronics up 0.14%, while SK Hynix fell 1.32%.

Oil prices were higher at the end of the Asian day, with Brent crude last up 0.54% at $85.32 per barrel, and West Texas Intermediate ahead 0.92% to $83.04.

In Australia, the S&P/ASX 200 rose 0.26% to 7,381.10, with oil plays on the front foot in the sunburnt country as prices for the thick black stuff rose.

Beach Energy was ahead 2.77% by the end of trading in Sydney, and Santos was 1.36% higher.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was 0.11% weaker at 12,998.51, as inflation in the country turned out to be running seriously hotter than anticipated.

The latest data from Statistics New Zealand showed prices rose 4.9% in the September quarter, making for the fastest increase in more than a decade, and meaning inflation was almost two percentage points higher than the top end of the Reserve Bank of New Zealand’s target range.

That led to a change in outlook for local market watchers, with traders now pricing in a 50% chance the central bank hikes the official cash rate (OCR) by 50 basis points to 1% in its November decision.

The RBNZ already became one of the developed world’s first central banks to increase interest rates in the wake of the Covid-19 pandemic, raising the OCR by 25 basis points to 0.5% earlier this month.

Both of the down under dollars were weaker against the greenback, with the Aussie last off 0.39% at AUD 1.3527, and the Kiwi retreating 0.2% to NZD 1.4167.